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Gold futures rallied 1% to hit a one-week high on Friday, as concerns over a possible U.S. government shutdown and hopes of continued stimulus from the Federal Reserve boosted sentiment on the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery rose 1.15% on Friday to settle the week at USD1,339.20 a troy ounce.
Gold futures rose by as much as 1.5% earlier in the session to hit a daily high of USD1,344.40 a troy ounce, the strongest level since September 10.
The December contract settled 0.9% lower at USD1,324.10 a troy ounce on Thursday.
Gold futures were likely to find support at USD1,306.20 a troy ounce, the low from September 24 and resistance at USD1,366.50, the high from September 20.
On the week, the precious metal advanced 0.5%, the second consecutive weekly gain.
Concern that U.S. lawmakers will fail to arrange a budget deal preventing a government shutdown next week boosted the safe-haven appeal of the precious metal.
Congress must pass a short-term budget by midnight on Monday in order to avoid a government shutdown.
Republican opposition to the funding of the Affordable Care Act has created a standoff with the White House and the Democratic-controlled Senate, which have both said they will not support any budget bill that defunds or amends Obamacare.
Later this month, Congress will have to extend the U.S. debt ceiling which the U.S. Treasury Department has estimated will be reached by October 17.
Meanwhile, gold traders continued to watch speeches from Federal Reserve officials for clues on monetary policy.
Speaking on Friday, Chicago Federal Reserve Bank President Charles Evans said that there is a chance the central bank will not move to taper its bond-buying program until early 2014.
His comments came after three top Fed officials said on Thursday the central bank had confused markets over its policy outlook.
Mixed U.S. economic data on Friday further added to uncertainty about how quickly the Fed will scale back its USD85-billion-a-month bond-buying program.
The Thomson Reuters/University of Michigan consumer sentiment index fell to a four-month low of 77.5 in September from 82.1 the previous month.
Separately, official data showed that U.S. personal spending rose 0.3% in August, in line with expectations, after an upwardly revised 0.2% increase the previous month.
Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.
The precious metal is on track to post a loss of nearly 21% on the year as traders bet an improving U.S. economy would lead the Fed to unwind its stimulus program by the year's end.
The central bank is scheduled to meet October 29-30 to review the economy and assess policy.
In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report, for indications on whether the economic recovery is sufficiently strong for the Fed to start rolling back its stimulus program.
Markets will also be watching developments in U.S. budget negotiations.
Elsewhere on the Comex, silver for December delivery inched up 0.3% on Friday to settle the week at USD21.83 a troy ounce. Silver prices settled 0.55% lower at USD21.76 on Thursday.
On the week, silver future prices declined 0.4%, the third consecutive weekly loss.
Meanwhile, copper for December delivery advanced 0.7% on Friday to close the week at USD3.329 a pound. On Thursday, copper futures rallied 1.1% to settle at USD3.307 a pound.
Prices of the red metal advanced 0.3% on the week.
Copper traders will be closely watching key manufacturing data out of China next week, to gauge the economic strength of the world’s largest copper consumer. - investing.com
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