Gold advanced as investors assessed the impact on monetary stimulus as U.S. lawmakers wrangled over the debt limit and a partial government shutdown entered a seventh day. Silver, platinum and palladium gained.
Bullion for immediate delivery rose as much as 0.6 percent to $1,319 an ounce and traded at $1,314.55 at 7:40 a.m. in Singapore. Gold, which rallied from an eight-week low of $1,277.15 on Oct. 2, dropped 22 percent in 2013 on speculation the U.S. Federal Reserve will scale back its $85 billion-a-month of bond-buying as the economy improves.
Prices declined 1.9 percent last week on speculation that the shutdown will be short-lived. U.S. Speaker John Boehner said the House can’t pass an increase to the U.S. debt ceiling without packaging it with other provisions, a nonstarter for President Barack Obama. Treasury Secretary Jacob J. Lew reiterated that Congress needs to pass a debt-ceiling increase by Oct. 17 or risk defaulting on its payments.
“Gold may find support from expectations for a delay in the Fed’s tapering of its quantitative easing program given the government shutdown,” Howard Wen, an analyst at HSBC Securities (USA) Inc., wrote in a note. “The perception of progress over the budget talks would be negative for bullion in the short term.”
Gold for December delivery gained 0.3 percent to $1,314.40 an ounce on the Comex in New York. Trading was 59 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.
Traders and analysts are bullish for a third week, the longest positive run since July, with 18 respondents in a Bloomberg survey expecting gold prices to rise this week, compared with eight who were bearish and four neutral. Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, stood unchanged on Oct. 4 at 899.99 metric tons, the least since February 2009.
Silver for immediate delivery advanced 0.4 percent to $21.82 an ounce, climbing for a second day. Platinum also gained a second day, rising 0.2 percent to $1,390.93 an ounce. Palladium added 0.5 percent to $702.65 an ounce, snapping five days of losses.
Impala Platinum Holdings Ltd. (IMP), the second-largest producer, reached a deadlock in wage talks with the biggest union at its operations and will be looking for a mediated settlement to avoid a possible strike, the company said Oct. 4.