Gold rose for the first time in three sessions as U.S. lawmakers remained deadlocked over extending the nation’s debt limit to avoid default amid a government shutdown, stoking demand for the metal as a store of value.
With the U.S. set to exhaust measures to avoid breaching its debt ceiling on Oct. 17, House of Representatives Speaker John Boehner said lawmakers won’t raise the limit without packaging it with other provisions. President Barack Obama’s administration has said it won’t negotiate with Republicans over funding the government or raising the debt ceiling.
“Gold is getting some bids because of the uncertainty,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “It will be a very big deal if the U.S. defaults.”
Gold futures for December delivery rose 1.2 percent to settle at $1,325.10 an ounce at 1:36 p.m. on the Comex in New York. Prices dropped 2.2 percent last week amid speculation that the Federal shutdown that has furloughed 800,000 workers would be short-lived.
Volume was 43 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed.
The U.S. faced an impasse over raising the debt ceiling in 2011 before Congress approved a plan to head off a default. Gold reached a record $1,923.70 on Sept. 6, 2011.
Prices are set for a first annual drop in 13 years as some investors lost faith in the metal as a store of value and on speculation that the Federal Reserve will slow its debt purchases.
Silver futures for December delivery jumped 2.9 percent to $22.386 an ounce, after reaching $22.495, the highest for a most-active contract since Sept. 20.
On the New York Mercantile Exchange, platinum futures for January delivery advanced 1 percent to $1,401.90 an ounce. Palladium futures for December delivery rose 0.5 percent to $705.35 an ounce.
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