Gold prices have climbed as jitters over the continued US budget stalemate fanned interest in the haven asset.
The most actively traded contract, for December delivery, on Monday rose $US15.20, or 1.2 per cent, to settle at $US1,325.10 a troy ounce on the Comex division of the New York Mercantile Exchange.
The US federal government remained shut down for the seventh straight day on Monday as lawmakers continued to wrangle over the budget. Democrats and Republicans appeared no closer to an accord on funding the government after a weekend spent digging in to positions along party lines.
Many investors worry that the current impasse will set the tone for the coming debt-ceiling talks. Lawmakers must find a compromise on raising the national borrowing limit by October 17 or risk triggering a US sovereign-debt default.
While gold has done well in recent days in response to the political news flow, gains remain muted as few in the market believe lawmakers won't reach an accord in time, said Bill Baruch, a senior market strategist with Chicago-based futures brokerage iiTrader.
"You're seeing some fear supporting gold now, but gold is still in a down market," Baruch said.
Gold prices are off 0.1 per cent from September 30, the day before the shutdown began, and are down 21 per cent so far this year.
"But if we extend this and actually default on the debt, gold will be a safe haven," he said.
Gold prices also drew strength from a weaker equities market. The Standard & Poor's 500 index was recently down seven points, or 0.4 per cent, at 1,684.
Some investors consider gold a store of value and an alternative asset, and flock to buy the metal when equities are struggling.
"As the week works itself out, without a resolution (gold) will drift higher," said Peter Hug, director of trading with Kitco Metals.
Gold futures had slipped for three consecutive sessions late last week, as investors were upbeat about the prospect for an eventual resolution to the budget gridlock.
Settlements (ranges include open-outcry and electronic trading):
London PM Gold Fix: $1,323.50; previous PM $1,309.75
Dec gold $1,325.10, up $15.20; Range $1,307.90-$1,329.50
Dec silver $22.386, up 63.4 cents; Range $21.650-$22.495
Jan platinum $1,401.90, up $13.90; Range $1,384.20-$1,404.60
Dec palladium $705.35, up $3.40; Range $695.60-$706.00