Indian gold futures are likely to extend gains this week to hit a record high, on expectations of a further depreciation in the rupee and monetary easing by the U.S. Federal Reserve.
"Gold should maintain the upward bias till at least tomorrow. Tomorrow being the FOMC announcement," said Gnanasekar Thiagarajan, director with Commtrendz Research in Mumbai.
At 1255 GMT, the most-active gold for August delivery on the Multi Commodity Exchange (MCX) was 0.18 percent higher at 30,363 rupees per 10 grams, after hitting a record high of 30,428 rupees.
"Buy gold on dips to 30,250 rupees, for a target of 30,575 rupees," said Thiagarajan.
The rupee, which fell for a second straight session to hit its lowest level in more than two weeks, plays an important role in determining the landed cost of the dollar-quoted yellow metal.
Traders fear the rupee could make a renewed push to the record low at 56.52 hit against the dollar on May 31, and believe any breach below 56.20 may trigger intervention from the central bank.
The gold market has been garnering belated safe-haven support from the euro zone crisis despite a positive outcome from the Greek election.
Spanish government bond yields fell after a sale of short-dated bills generated decent demand but borrowing costs soared with investors still jumpy ahead of another auction on Thursday.
The Federal Open Market Committee (FOMC) releases a policy statement at the end of its two-day meeting on Wednesday. The Fed's current "Operation Twist" programme, which involves buying long-term debt and funding the purchase by selling short-term notes, is scheduled to expire at the end of June.
"Silver is stuck in a range. Break on either side could determine direction," said Thiagarajan.
Silver for July delivery on the MCX was 0.16 percent higher at 55,002 rupees per kg. (Reporting by Siddesh Mayenkar; Editing by Sunil Nair)