Gold prices rallied for their eighth consecutive session on Tuesday, as investors cautiously dipped their toes back into the market with the Federal Reserve’s policy meeting in sharp focus for hints on sentiment towards extra policy stimulus. The market seemed to garnering belated safe-haven support from the euro zone crisis despite a positive outcome from Greece’s 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. Gold stood at $1,630.55 by 1003 GMT, just off an intraday high of 1,632.90. The market is still a long way off the record seen last year at $1,920.30. US benchmark August gold futures gained $4.20 to $1,631.20, while the euro cut gains versus the dollar after Germany’s ZEW business sentiment index felt the drag of Spanish and Greek concerns. Traders and analysts said gold was starting to display safe-haven characteristics, after sliding in tandem with other markets when the euro zone’s debt problems spiralled, with investors having sought U.S. dollars and Treasuries instead. “Gold has hardly been leading from the front as it’s been seen as a source of cash rather than a currency in its own right - but there are some signs that with ETF inventories on the rise again...that maybe, just maybe there is some fresh money coming in,” said Simon Weeks, director, precious metals sales at ScotiaMocatta in London. 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. “Ahead of the FOMC meeting, gold bugs will watch for signs of more quantitative easing or an extension of Operation Twist when it ends this month,” said Lynette Tan, an analyst with Phillip Futures in Singapore. “A failure to confirm more asset purchase or the like could see gold dropping again. For the moment, we expect policy decisions from the Fed to influence gold price more than risk appetite linked to the euro crisis.” The Fed appears increasingly likely to offer more monetary stimulus despite political opposition, internal reticence and concerns about whether it will be effective, economists say. Previous rounds of asset purchases by the Fed to drive down interest rates and stimulate the economy had weakened the US dollar, boosted global stock markets and polished gold’s appeal as a hedge against inflation. Gold jumped to its highest level in 2012 around $1,790 in February after the Fed at the time said it would keep interest rates near zero until at least the end of 2014. But prices have shed about 9 percent since then on no signs of further easing. Europe agreed on Monday to move towards a more integrated banking system to stem a debt crisis that threatens the survival of the euro. At a Group of 20 summit of the world’s leading industrialized and developing economies in Mexico, Germany and its big euro zone partners took the unusual step of spelling out in detail measures to complete the economic and monetary union they launched to great fanfare 13 years ago. Trading was subdued on physical markets due to spot price volatility, but there was some gold scrap selling from Thailand, dealers said. “The price keeps changing, so that has discouraged customers from coming into the market. One moment it’s down, and then it’s up again,” a dealer in Singapore said. Holdings of the largest gold-backed exchange-traded-fund (ETF), New York’s SPDR Gold Trust climbed by 0.33 percent on Monday from Friday, while that of the largest silver-backed ETF, New York’s iShares Silver Trust rose by 0.62 percent for the same period.