Gold advanced the most in a week as U.S. lawmakers struggled to reach an accord on raising the nation’s debt limit, increasing demand for the precious metal as a haven.
President Barack Obama summoned the four congressional leaders to the White House for talks to end a partial government shutdown and prevent U.S. borrowing authority from lapsing in three days. Senate Majority Leader Harry Reid said he and Minority Leader Mitch McConnell are closer to an agreement. Bullion dropped to a three-month low last week on speculation that lawmakers would reach an agreement to raise the debt ceiling and end the shutdown.
“Demand for gold is on the rise as it’s not apparent anymore that the parties will reach an agreement before the deadline,” Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview.
Gold futures for December delivery added 0.7 percent to settle at $1,276.60 at 1:37 p.m. on the Comex in New York, the biggest jump for a most-active contract since Oct. 7.
“We’re seeing some quite good physical demand at these levels,” Bernard Sin, head of currency and metal trading at bullion refiner MKS (Switzerland) SA in Geneva, said by telephone. “The U.S. is the main story, focusing on the developments around the shutdown. Prices will continue to be volatile.”
Gold is down 24 percent this year, heading for the first annual drop since 2000, as some investors lost faith in the metal as a store of value and on speculation that the Federal Reserve will slow debt purchases. The U.S. government has been partially shut since Oct. 1 after lawmakers failed to pass a budget.
Silver futures for December delivery rose 0.4 percent to $21.354 an ounce in New York.
On the New York Mercantile Exchange, platinum futures for January delivery increased 0.6 percent to $1,383.50 an ounce. Palladium futures for December delivery climbed 0.3 percent to $715.25 an ounce.