Gold fluctuated, holding above $1,300 an ounce, as investors assessed the potential for an agreement to raise the U.S. debt ceiling and avert default.
Bullion for immediate delivery fell 0.4 percent and rose 0.5 percent before trading at $1,303.47 at 10:47 a.m. in Singapore. Prices dropped 1 percent yesterday, touching a one-week low of $1,294.76, as the dollar strengthened 0.3 percent against a basket of 10 currencies tracked by Bloomberg.
U.S. lawmakers are open to a short-term increase in the nation’s debt limit to avert a default, according to Republican and Democrat aides who spoke on condition of anonymity, potentially putting the economy back on track for recovery and paving the way for the Federal Reserve to taper its $85 billion- a-month of bond buying. Gold dropped 22 percent this year on speculation the U.S. central bank may cut asset purchases.
“As the market tries to get a read on the political wrangling in the U.S., gold is weighed down by recent strength in the dollar,” said Wang Xiaoli, chief investment strategist at CITICS Futures Co., a unit of China’s biggest listed brokerage. “It appears that for some investors, the dollar is still the haven of choice.”
Most Fed policy makers said the central bank was likely to taper its bond purchases this year, according to minutes of their last meeting, when they unexpectedly refrained from reducing the pace of bond-buying. The government shutdown, which enters a 10th day, has interrupted the flow of data the Fed uses to assess the economy’s health, including payrolls.
Gold for December delivery declined 0.3 percent to $1,303 an ounce on the Comex in New York after yesterday falling to a one-week low of $1,294.60. Trading was 42 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.
Silver for immediate delivery rose and fell 0.3 percent, before trading little changed at $21.87 an ounce. Platinum rose 0.1 percent to $1,382.85 an ounce and palladium added 0.1 percent to $702.93 an ounce.
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