Spot gold gained nearly 1 percent in early trade, before trimming gains to $1,490.95 an ounce by 0559 GMT, up 0.7 percent. It hit a record high of $1,497.20 in the previous session. US gold futures were little changed at $1,492.10.

Concerns about inflation also helped gold shine.

“There is so much news that is in favor of gold,” said a Singapore-based dealer.

“Gold is still the safe-haven of choice.” 

Just as talk heated up on whether Greece might need to restructure its debt, Standard & Poor’s threatened to cut the United States’ prized AAA credit rating, sending the 19-commodity Reuters-Jefferies CRB index down 1 percent on Monday. 

The CBOE Volatility Index, Wall Street’s favorite barometer of investor anxiety known as the VIX, jumped as much as

24.5 percent on Monday after S&P warned about the towering US budget deficit.

China raised banks’ reserve requirement ratio on Sunday to a record level in its fourth such move this year aimed at wrestling down inflation, while some US Federal Reserve officials have warned about more pressing inflation risks in coming months.

But there is little sign the Fed could cut short its $600 billion bond purchase program, due to be completed in June.

Crude oil prices extended losses on worries that high oil prices would threaten global economic recovery, which supports the strength in gold prices.

Technical analysis indicated gold’s bullish target remained intact at $1,518, according to Reuters market analyst Wang Tao.

Spot gold marched up about $40 over the last seven days, and silver hit 31-year highs in the past three consecutive sessions.

Although the macroeconomic and geopolitical environment supports safe-haven demand in such metals, a correction may be looming,

some traders and analysts said.

“We may see a correction before the Easter holiday,” said Ronald Leung, a dealer at Lee Cheong Gold Dealers in Hong Kong.

“Prices have been rising too fast and too much.”

Downside room will be limited for both gold and silver, with $1,480 providing strong support to gold, and $40 to silver, traders said.

Some physical selling was spotted, as market participants took profit and waited for the next buying opportunities when prices pull back, dealers said.

Spot silver declined 0.8 percent to $42.96 an ounce, after hitting a 31-year high of $43.51 in the previous session, as weakness in the equities market weighed on precious metals with industrial applications, such as silver and platinum group metals.

Spot palladium fell to a nearly one-month low of $728.64, before regaining some lost ground to $732.72, down 1 percent from the previous close.