Gold prices extended their gains as the US dollar remained under some pressure amid continued optimism over fresh round of monetary easing from the world's leading central banks.
Dollar-denominated commodities tend to rise on a weaker US currency, as they get cheaper for holders of other currencies.
Global investors were awaiting the release of minutes from the US Federal Reserve’s last policy meeting to ascertain the prospects of further quantitative easing.
Gold futures for December delivery were up US$1 to US$1,644.20 an ounce in electronic trade.
On Tuesday, gold futures reached a three-and-half month high as the dollar weakened on increased hopes that the ECB will take steps to reduce borrowing costs for Spain and Italy.
Also, emerging-market central banks and other major investors are accumulating gold to protect against weakening currencies.
Central banks will purchase close to 500 tons this year after becoming net buyers in 2009, according to the producer- funded World Gold Council (WGC). Central banks added 254.2 tons to their holdings in the first half, according to WGC.
Global investment holdings of gold expanded to an all-time high this week.
Billionaire investors George Soros and John Paulson increased their stakes in the SPDR Gold Trust, the biggest gold- backed exchange-traded product, in the second quarter.
Holdings in ETPs including the SPDR jumped to a record 2,437.495 metric tons yesterday, according to reports.
Spot gold, which traded at US$1,644.65 an ounce at 4:48 p.m. in Singapore, has rallied for 11 years and reached a record US$1,921.15 on Sept. 6.
Gold futures on Tuesday broke out of its trading range. Moreover, the price is now in vicinity of the 200-day moving average, which also attracts technical buying.
However, the fundamentals for the precious metal are not so supportive.
The Bombay Bullion Association (BBA) expects Indian gold imports from September to December to total just 200-250 tons on the back of record-high gold prices in local currency, high inflation and the poor monsoon season.
Gold imports during the September-December peak demand season could fall by 40%.
Gold imports into India have already halved so far this year.
In India, gold traders refrained from taking fresh positions, as the yellow metal rose for a sixth straight session to hit its highest level in nearly two months.
The most-active gold for October delivery on the Multi Commodity Exchange (MCX) struck a high of Rs 30,440, a level last seen on June 26.