NEW DELHI(BullionStreet) : Two days after news broke out that India and Iran have agreed for a 'gold for oil' deal, India said the report was speculative and needs no response.

According to country's Oil Minister, S Jaipal Reddy India will continue to explore payment options for oil imports from Tehran and will only abide by U.N. sanctions and not those imposed by any bloc of countries.

Speaking to newsmen here, he said India got enough time to think about any other options to buy Iranian oil and added that as of now, supplies are on and Iran has been very positive and we are still optimistic.

Observers said the current speculation if turned out to be true in future will have significant impact on gold markets and helped the yellow metal to climb.

They added that vast sums involved in these transactions are expected to boost the price of gold and depress the value of the dollar on world markets.

They said investors are watching the devolopments though gold markets chose to ignore the controversy at the moment.

An Israeli website, debka.com on Tuesday reported that India had agreed for gold for oil scheme and became the first country to pay for its purchases in gold instead of dollars.

The report added that China is also expected to join India in gold for oil deal with Iran.

India and China take about one million barrels per day (bpd), or 40 percent of Iran's total exports of 2.5 million bpd and both of them have huge reserves of gold.

Oil imports, particularly from Iran, are critical for India's energy security, as 80 percent of oil requirements come from outside the country. Iran accounts for about 12 percent of India's total oil imports