Gold gained for the first time in four days as an impasse in U.S. budget talks boosted demand for the metal as an investment haven.
Lawmakers canceled a planned vote on higher taxes for top earners, giving them less than a week to reach agreement to avert tax increases and spending cuts set to take effect next month. The Congressional Budget Office has said that a failure to avert those changes would probably lead to a recession in the first half of 2013.
“Budget talks are the main concern right now,” Bart Melek, the Toronto-based head of commodity strategy at TD Securities, said in a telephone interview. “There is really too much ambiguity in the market.”
Gold futures for February delivery advanced 0.9 percent to settle at $1,660.10 an ounce at 1:44 p.m. on the Comex in New York. The price dropped 3.1 percent in the previous three days on speculation that better U.S. economic data will ease pressure on the Federal Reserve to expand monetary stimulus.
Prices also rose after Brazil boosted its gold reserves for a third month, with holdings doubling since August. The bullion increase of 14.7 metric tons in November was the nation’s biggest in 12 years, data from the International Monetary Fund showed.
“The central banks in emerging economies have been continuing their policy of diversifying their currency reserves,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said in an e-mail. “This trend is likely to continue next year, meaning that central banks will play a considerable part in the price increase we envisage in 2013.”
Silver futures for March delivery rose 1.8 percent to $30.203 an ounce on Comex, paring this week’s loss to 6.5 percent.
On the New York Mercantile Exchange, platinum futures for January delivery dropped 0.6 percent to $1,536.90 an ounce, the fifth straight decline. Palladium futures for March delivery rose 0.3 percent to $682.30 an ounce.