The metal held onto gains after a statement by EU leaders calling for a fourfold increase of the capacity of the euro zone bailout fund to one trillion euros. Gold benefited from a lack of clarity as details will not be decided until next month.

Bullion has gained nearly 7 percent during its four-day winning streak, and it appeared to reprise its traditional safe-haven role after having moved in sync with riskier assets. Investor expectations that EU will eventually introduce a massive new market stimulus program in the 17-nation economic zone gave gold a huge boost.

"I don't think the EU plan has been fully quantified, so there are some concerns about what's going to happen to the peripheral economies on that part of the continent. Even if we increased the bailout fund, we would still have a debt crisis," said Bruce Dunn, vice president of trading at bullion dealer Auramet.

Spot gold was up by 1.1 percent to $1,720.20 an ounce by 3:47 p.m. EDT (1947 GMT), having risen earlier to a one-month high of $1,726.50.

Uncertainty over U.S. futures brokerage MF Global Holdings Ltd's reviewing its strategic options including a possible sale, and strong physical demand related to the Hindu festival of Diwali - a major gold buying event - helped lift gold prices, traders said.

Bullish strategies related to the popular $1,700 calls also boosted underlying futures prices as COMEX November options are scheduled to expire at the end of the trading day.

COMEX gold options floor traders Jonathan Jossen said heavy buying of the bull call spread between $1,700 and $1,750 could further support gold's rally. Others also bought the $2,000 calls as well as puts to hedge downside risks, he said.

U.S. gold futures for December delivery settled up $23.10 at $1,723.50 an ounce.

Volume was slightly below its 30-day average after a slower trading pace in the last several weeks. On Tuesday, gold futures posted their largest turnover in a week at nearly 200,000 lots, or 20 million ounces, topping the 30-day rolling average by its widest margin in a month.

Gold rose above $1,700 an ounce for the first time in a month on Tuesday, notching one of its biggest rallies since 2008, fueled by the gloomiest U.S. consumer sentiment data in 2-1/2 years.

EU SUMMIT SETS TRADING TONE

High uncertainty as EU officials wrangled over how to scale up the euro zone rescue fund and over how much of a loss private bondholders will take on Greek debt has prompted investors to seek a shelter in gold in the last two sessions.

Independent investor Dennis Gartman said that gold soared on expectations that the ECB would have no choice eventually but to join the Federal Reserve and other central banks in adopting quantitative easing measures.

"The question in our mind is not if the ECB moves in this direction, but when," Gartman said.

This week so far has seen the largest two-day rise in global holdings of gold in exchange-traded products since early August, having increased by over half a million ounces to 67.768 million ounces.

In other metals, silver was up 0.2 percent at $33.28 an ounce, echoing the strength in gold.

Platinum was up 2.1 percent at $1,589.99 an ounce, while palladium was up 0.8 percent at $641.97.