Gold firmed on Wednesday, helped by safe-haven demand as the Eurozone troubles deepened and business surveys showed the severe impact the crisis had on manufacturing in the region.
A recovering euro, which rebounded from a three-week low against the dollar, also helped underpin the precious metal.
Greece's Prime Minister George Papandreou shocked markets on Tuesday with a call for a referendum on a European Union 130 billion euro bailout package. He won the backing of his cabinet on Wednesday, but will find the stunned Eurozone leaders who struck the deal last week harder to convince.
Adding to the gloom, business surveys showed the downturn in Eurozone manufacturing in October was even deeper than previously reported.
There is more of a risk aversion type dynamic developing because of all the complications around Europe and with the Greek referendum on the cards, Standard Chartered head of metals research Dan Smith said.
All these things will bring some doubts about the political and macro outlook.
U.S. gold rose more than 1 percent to $1,732.9 an ounce, off an earlier $1,738.3 high.
Spot gold rose around 1 percent to an intra-day high of $1,736.40, and was $1,731.50 at 1015 GMT (6:15 a.m. EDT) from $1,718.95 late in New York on Tuesday.
The euro edged up on Wednesday, rebounding from a three-week low against the dollar as investors took a breather from a deep sell-off, although it was vulnerable to the downside on worries over Greece's referendum and the weak data.
EYES ON BERNANKE
Eyes were on a news conference by the U.S. Federal Reserve chief Ben Bernanke later in the day after a two-day policy meeting.
The Fed looked set to take a breather from monetary stimulus measures, even if financial market turbulence heightens the chances of action later.
Investors will also closely watch the rate decision by the European Central Bank due Thursday, just as a Group of 20 summit is to take place and likely to pressure Europe on the debt crisis solution.
Investor interest in gold continued to pick up this week, reflected in inflows of metal into exchange-traded funds.
Holdings of gold in the major exchange-traded funds (ETF) tracked by Reuters have risen by over 800,000 ounces this month, marking their first monthly increase since July.
In ETF flows on Wednesday, gold holdings were up by just over 11,000 ounces after an inflow into the COMEX Gold Trust.
Last month, global holdings of gold in ETFs rose by 852,000 ounces to 67.907 million ounces, more than offsetting the 444,000 ounces outflow in September and the 297,000 ounces outflow in August.
They have been trending up for the last week or so. Investors are coming back in to those two because of the weaker macro environment, Smith said.
It's also a good time of the year for physical demand for gold as well as we head into the end of the year because of the Indian wedding season.
The bulk of the inflows were into European-based funds, rather than their larger U.S. counterparts, which analysts have said is reflective of the anxiety among investors in the region over the impact of the euro zone debt crisis on monetary policy, inflation and growth.
Silver was up almost 1 percent at $33.57 an ounce from $33.27 previously. Platinum rose 0.7 percent to $1,593.49 an ounce from $1,582.65, and palladium was $637.97 from $631.50.
(Additional reporting by Amanda Cooper)