The market is buzzing with hopes that the Fed will announce another round of quantitative easing, known as QE3, at the conclusion of a two-day policy meeting on Thursday.
Gold is set to get another boost if the expectations materialise, as easier monetary policy stokes inflation outlook and drives investors to bullion, seen as a good hedge against rising prices.
The price of bullion has risen more than 2 percent so far this month, following a nearly 5-percent gain in August during which central banks around the world appeared more willing to take up further stimulus measures to aid the frail global economy.
"If we do see a QE3 announcement, gold is likely to race through $1,800 an ounce," said Chen Min, an analyst at Jinrui Futures in the southern Chinese city of Shenzhen.
"But we also need to realise that the marginal effect of quantitative easing will diminish and it will be too optimistic to expect gold to break above $1,850 even if QE3 is announced."
During Asian trading hours, gold may just mark time and continue to move in a tight range, with many investors standing by on the sidelines.
Spot gold was little changed at $1,731.59 an ounce by 0342 GMT, off a near six-month high of $1,746.20 hit on Wednesday after a German constitutional court handed down a ruling in favour of the euro zone's rescue fund.
US gold also traded nearly flat at $1,734.30.
Technical analysis showed a less optimistic picture. Spot gold may retrace to $1,708 an ounce during the day, said Reuters market analyst Wang Tao.
Though the prospect of QE3 has greatly encouraged risk appetite among investors, sending Wall Street to pre-crisis levels and sinking the dollar to a four-month low against a basket of currencies, some analysts were sceptical of what effect another round of bond-buying would have on the economy.
"Although previous rounds of QE have helped kick-start some growth in the US, the fact that we are once again at the 'money trough' is not very reassuring," Ed Meir, an analyst at INTL FCStone, said in a research note.
"We will have to see if investors reach the same conclusion in the weeks ahead, particularly if they see no immediate improvement in the macro numbers."
Holdings of gold-backed exchange-traded funds eased slightly from a historical high to 72.47 million ounces by Sept 12, still up nearly 3 percent over the past month, as investor interest in gold picked up again on prospects of easing monetary policy around the world.
Labour unrest in South Africa's gold and platinum industries are still affecting prices. Machete-wielding strikers forced the world's No.1 platinum producer Anglo American Platinum to shut down some of its South African operations, sending spot platinum to a five-month high of $1,654.49 in the previous session.
Spot platinum traded up half a percent to $1,643.49.
Spot palladium gained 0.9 percent to $676.97, but was off a four-month high of $680.50 in the previous session.