Gold rose for an eighth consecutive session on Tuesday, the longest winning streak since July last year, after a weekend victory for pro-bailout parties in Greek elections failed to shake off worries about a worsening debt crisis in Europe.
Investors shifted their focus to a policy meeting by the US Federal Reserve, which economists say, appears increasingly likely to offer more monetary stimulus despite political opposition, internal reticence and concerns about whether it will be effective.
Gold hit an intraday high of $1,630.59 an ounce and was steady at $1,627.95 an ounce. Gold rallied to a record of around $1,920 in 2011, when investors turned to the metal as a safe haven during the debt crisis in Europe.
"Ahead of the Federal Open Market Committee(FOMC) meeting, gold bugs will watch for signs of more quantitative easing or an extension of Operation Twist when it ends this month," said Lynette Tan, an analyst with Phillip Futures in Singapore.
"A failure to confirm more asset purchase or the like could see gold dropping again."
The Federal Open Market Committee releases a policy statement at the end of its two-day meeting on Wednesday. The Fed's current "Operation Twist" programme, which involves buying long-term debt and funding the purchase by selling short-term notes, is scheduled to expire at the end of June.
US gold for August delivery added $2.00 an ounce to $1,629.00 an ounce.
"For the moment, we expect policy decisions from Fed to influence gold price more than risk appetite linked to the euro-crisis," said Tan at Phillip Futures.
Previous rounds of asset purchases by the Fed to drive down interest rates and stimulate the economy had weakened the US dollar and boosted global stock markets, while burnishing gold's appeal as a hedge against inflation.
Gold jumped to its highest level in 2012 around $1,790 in February after the Fed at the time said it would keep interest rates near zero until at least the end of 2014. But prices have shed about 9 percent since then on no signs of further easing.
The euro steadied on Tuesday, but shares in Asia fell after a post-Greek election enthusiasm gave way to persistent concerns over Spain and its banking sector as the country struggles with a deep recession.
Spain is likely to pay record high borrowing rates at debt auctions this week. Spain's Treasury will issue 2 billion to 3 billion euros of 12- and 18-month debt on Tuesday and between 1 billion and 2 billion euros of bonds due in 2014, 2015 and 2017 on Thursday.
The Group of 20 leading and emerging economies will "take the necessary actions" to strengthen the global economy, and if growth weakens substantially, countries without heavy debt loads stand ready to stimulate their economies, according to a draft communique from the G20 summit.
Trading was lacklustre in the physical market due to wild swings in spot prices, but there was a bit of selling of gold scraps from Thailand, dealers said.
"The price keeps changing, so that has discouraged customers from coming into the market. One moment it's down, and then it's up again," a dealer in Singapore said.