Spot gold peaked just below $1,850 per troy ounce before easing off to trade around $1,838 per ounce. U.S. gold futures were up 1% at $1,844.10.

Gold prices have been on a general incline since the beginning of November as market turbulence, rising recession expectations and more gold purchases from central banks underpinned demand.

"In general, we are looking for a price friendly 2023 supported by recession and stock market valuation risks — an eventual peak in central bank rates combined with the prospect of a weaker dollar and inflation not returning to the expected sub-3% level by year-end — all adding support," said Ole Hansen, head of commodity strategy at Saxo Bank.

"In addition, the de-dollarization seen by several central banks last year when a record amount of gold was bought look set to continue, thereby providing a soft floor under the market."

Looking ahead, Hansen suggested the key events for gold prices would be Wednesday's minutes from the latest U.S. Federal Reserve meeting and Friday's U.S. jobs report.

"Above $1842, the 50% [mark] of the 2022 correction, gold will be looking for resistance at $1850 and $1878 next," Hansen added.

New all-time high in 2023?

Much of the 2023 outlook for global markets hinges on the trajectory of monetary policy as central banks ease off the aggressive interest rate hikes of the past year amid slowing economic growth and possible recessions.