New Delhi, May 22 -- Gold prices witnessed a strong rally on Thursday, May 23, both in domestic and international markets, as a combination of a weakening U.S. dollar and heightened fears over America's growing debt load reignited safe-haven demand. The spark was Moody's downgrade of the U.S. government's long-term issuer and senior unsecured ratings, which sent investors rushing toward gold amid growing concerns about fiscal sustainability.

In the domestic futures market, gold June 5 contracts on the Multi Commodity Exchange (MCX) surged 0.67 percent to trade at Rs.96,235 per 10 grams. Internationally, gold prices climbed nearly 1 percent, hitting their highest levels since May 9.

The renewed bullishness came after Moody's downgraded t...