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Gold jumped 3 percent to a 6-1/2 month high on Wednesday as risk aversion prompted investors to buy gold and bullion-backed exchange-traded funds as a haven.
Prices pushed through tough resistance just above $930 to reach a peak of $944.30.
At 1528 GMT (10:28 a.m. EST) spot gold was quoted at $944.20/946.20 an ounce, against $914.15 late on Tuesday. U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange rose $29.10 to $942.80 an ounce.
Prices have moved upwards throughout the day as investors digested details of a bank bail-out plan announced in the U.S. on Tuesday.
"There was a lot of disappointment behind the package, either because the measures weren't concrete enough or because they thought they hadn't tackled the root cause of the problem," said BNP Paribas analyst Michael Widmer.
"A lot of investors reassessed the risk in the market, and as risk aversion increased, it helped prices."
The United States on Tuesday rolled out a revamped bank rescue plan that may cost more than $2 trillion. Stocks slid by the most in two months after the plan was unveiled, while gold climbed 2 percent as investors sought safety.
CMC Markets strategist Ashraf Laidi said doubts about the U.S. plan to shore up banks and the economy had led to fears of an escalation of debt issuance.
"This combination of further debt escalation with a lack of any economic result is further fortifying gold's ascent," he said.
Physical gold and bullion-backed ETFs have increased in popularity in recent months as risk aversion has increased.
Holdings of the world's largest bullion-backed ETF, the SPDR Gold Trust, rose to a record 894.72 tonnes on February 10, up 12.85 tonnes from the previous day.
Gold's main external driver, the dollar, weakened against the euro as traders locked in profits made in the previous session.
A softer dollar typically benefits gold, which is often bought as a hedge against weakness in the U.S. currency.
Among other assets, U.S. stocks opened higher as investors hunted bargains following a sell-off sparked by the U.S. bank plan. European shares slipped, however.
Oil prices pared gains to hold below $38 a barrel after the International Energy Agency said fuel demand would contract more sharply than previously thought.
UPBEAT
Africa's top gold producers were upbeat on gold's outlook at this week's annual African mining conference. Experts say the metal could rise above $1,000 an ounce this year.
But the world's number 4 gold producer, Gold Fields (GFIJ.J), plans to cut as much as 10 percent of its workforce through voluntary layoffs, a union official said.
Silver rose to $13.60/13.66 an ounce from $13.10.
The metal has also benefited from ETF inflows. Holdings of the largest silver-backed ETF, the iShares Silver Trust, rose 1 percent to a record 7,606.89 tonnes on Monday.
Among other precious metals, platinum extended Tuesday's gains to $1,062.50/1,067.50 an ounce from $1,032, while palladium was up at $213/218 an ounce from $210.
Platinum has risen 6 percent since early Tuesday on the back of hopes there may be light at the end of the tunnel for the global economy, and as miners reported operational cutbacks.
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