Gold rose almost 1 per cent on Wednesday, boosted by some safe-haven buying caused by uncertainty over US budget talks.
The US Congress, struggling to avert a government shutdown next week, turned its attention to the other fiscal bullet coming at it: a federal debt default.
Republican leaders in the House of Representatives notified members that a vote on raising the debt limit could come as early as Friday. The uncertain outcome of the budget talks sent US Treasury bond prices higher while US equities fell.
Gold rose to a record US$1,920 an ounce in September 2011 partly on fears about the first US debt ceiling crisis, which confronted investors with the possibility that the world’s biggest economy would be unable to pay interest on its debt.
“We do not envisage the gold market to revisit the same euphoria seen during the debt ceiling crisis in mid-2011. Nonetheless, US debt ceiling concerns would still be viewed as positive for bullion,” said James Steel, chief precious metals analyst at HSBC.
Spot gold rose 0.8 per cent to US$1,332.60 per ounce at 4.03pm in New York.
The Comex gold contract for December delivery settled up US$19.90 at US$1,336.20 an ounce. Trading volume was about 10 per cent below the 30-day average, preliminary Reuters data showed.