Forexpros - Gold futures pared gains on Tuesday, but remained well-supported close to the record high as growing worries over global growth prospects supported safe haven demand, while markets awaited a Federal Reserve statement on monetary policy, which could provide hints regarding further easing.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,734.95 a troy ounce during U.S. morning trade, gaining 0.85%.
It earlier rose as much as 3.2% to trade at an all-time high of USD1,780.85 a troy ounce, eclipsing the previous high of USD1,724.45 a troy ounce it hit in the previous session.
Gold prices have climbed to record highs in 12 of the past 20 sessions.
The Fed's Open Market Committee was to meet later Tuesday, a day after the Dow Jones Industrial Average suffered its sixth-biggest drop on record and two days after leaders from the Group of Seven Nations pledged to "take all necessary measures to support financial stability and growth."
With financial markets in turmoil, expectations grew that the central bank would introduce further easing to calm investors and stimulate growth in the world's largest economy after it completed a USD600 billion Treasury bond-buying program known as Quantitative Easing 2 on June 30.
At its June meeting, the Fed reiterated that interest rates would be "exceptionally low" for an "extended period" and said the policy of reinvesting maturing securities to keep the balance sheet steady would be maintained for an unspecified period.
The "extended period" phrase means that the FOMC is at least two or three meetings away, or "significantly longer," from taking any action, Fed Chairman Ben Bernanke said at a June press conference.
Mr. Bernanke was not scheduled to hold a press briefing following today's decision, unlike after the June 21-22 policy meeting.
Meanwhile, JP Morgan said in a report on Monday that it expected gold prices to surge to USD2,500 an ounce by the end of the year, citing the U.S. debt downgrade, up from a previous estimate of USD1,800, which the bank called "too conservative".
The report came after fellow Wall Street investment bank Goldman Sachs raised its three-month average gold price forecast to USD1,645 an ounce, up from a previous estimate of USD1,565 an ounce.
Goldman also raised its six-month price forecast by 5.5% to USD1,730 an ounce and its 12-month price forecast to USD1,860 an ounce, up 7% from a previous projection.
Elsewhere on the Comex, silver for September sank 2.83% to trade at USD37.95 a troy ounce, while copper for September delivery jumped 1.7% to trade USD3.999 a pound.