Gold rose on Wednesday after data showed the U.S. economy unexpectedly contracted in the fourth quarter, and stayed higher as the Federal Reserve left in place its bond-buying stimulus plan.
The metal's inflation-hedge appeal received a boost after the Fed in its January policy statement repeated a pledge to keep buying securities until the outlook for employment "improves substantially.''
The U.S. central bank also said that economic growth had stalled but indicated the pullback was likely temporary.
Gold was also bolstered by hopes that the Fed would keep its monetary policy loose for a long time, after the Commerce Department said gross domestic product fell at a 0.1 percent annual rate, its weakest performance since it emerged from recession in 2009.
"The market had extended gains ahead of the Fed on the unexpected GDP number,'' said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.
"Most of what's in the Fed statement has already been baked into the price, and that put a market susceptible for a correction back to the downside,'' McGhee said.
Spot gold was up 0.7 percent at $1,675.61 an ounce, having risen as much as 1.1 percent to a one-week high of $1,682.90 an ounce after the Fed Open Market Committee (FOMC) statement.
U.S. gold futures settled up $19.10 at $1,679.90 an ounce, with trading volume about 25 percent above the 250-day average due to the February-April rollover ahead of February's first-notice day Friday.
Gold appears to be lifted by resurgent safe-haven demand as U.S. equities dropped after the surprise drop in the GDP number.
Spot silver rose 1.9 percent to $31.98 an ounce.
American Eagle silver coin sales in January surged to an all-time monthly high as the U.S. Mint resumed sales after huge demand triggered a brief suspension, while gold coins also posted their best performance since July 2010.
Nonfarm Payrolls Eyed
In the physical market, gold was supported after a top Indian finance ministry official told Reuters the country does not currently plan additional taxes or curbs on imports of gold as it waits to see the impact of recent tax hikes.
India along with China are the world's largest consumers of physical bullion.
Investors are also waiting for non farm payrolls data on Friday for a close look at the U.S. labor market. Economists surveyed by Reuters expect steady hiring from employers in January.
Platinum group metals were mixed after their recent sharp rallies.
Platinum refiner specialist Johnson Matthey PLC said it saw no upturn in Europe and Japan for its catalytic converter business in the new calendar year, but the weaker markets should be mitigated by slightly more promising prospects in North America. It also cited lower sales in its precious metals unit for the third quarter.