Gold traded in uncharted territory for a third straight session Tuesday as expectations that the U.S. Federal Reserve will deliver another hefty interest rate cut on Wednesday bolstered the precious metal's appeal.

Spot gold prices climbed to a record high of $933.33 (U.S.) an ounce in London. Gold futures, which have rallied 11 per cent so far this year, were trading at around $930.40, down $2.40 in New York.

Platinum prices also hit a record on Tuesday, rising to $1,735 an ounce.

The majority of traders believe the Fed will follow up on last week's emergency 75 basis point rate cut with a 50 basis point cut on Wednesday. Another half-point reduction by the Fed, which is trying to head off a recession, would bring the U.S. benchmark lending rate down to 3 per cent.

The threat of a major U.S. slowdown spilling over and weighing down global economic growth, a weak U.S. greenback, soaring crude oil prices, and geopolitical instability, have combined to boost gold prices to new highs in recent weeks, even as stock markets have taken a beating.

Gold tends to do well when the U.S. dollar falls. It also tends to outperform in the wake of a rate cut, as investors and speculators look for ways to hedge against inflation and put their money in alternative, safe-haven assets for better returns.

Meanwhile, bullish forecasts on bullion abound.

Clément Gignac, chief strategist at National Bank Financial in Montreal, now expects gold will hit $1,500 an ounce in the next 12 to 18 months, up from an August target of $900 an ounce.

“With bullion having broken through its previous record nominal price of $878 [Jan. 21, 1980], it's time to revisit our outlook and reiterate our view that gold is poised for a comeback as an investment haven,” he said in a note.

Bullion is an attractive tool for medium-term portfolio diversification through gold stocks or gold ETFs, Mr. Gignac said. “Our new gold target of $1,500 an ounce is still far from the early-1980s high of $2,200 in constant dollars.”