Spot gold was up $1.41, or 0.1 percent, at $1,353.69 an ounce by 1:18 p.m. EDT (1718 GMT). The metal hit an intraday high of $1,361.60, its highest since Sept. 20. US gold futures for December delivery were up $1.20 an ounce, or 0.09 percent, at $1,353.20. Adding to gold's appeal for investors betting on the Fed's continued stimulus spending are expectations that the US government shutdown will hurt macroeconomic data for October.
"October data is going to be a lot weaker than expected, so because of that gold prices are continuing to rise," said Phillip Streible, senior commodities broker at RJ O'Brien in Chicago. Bullion has fallen nearly 20 percent this year as investors dumped gold holdings for better-performing equities and on fears that the end of easy money from the US central bank would dim the metal's inflation-hedge appeal.
In the past two weeks, however, gold has gained about 6 percent as weak US data and budget battles in Washington looked set to deter the Fed from scaling back asset purchases. Bullion is on track to rise 2 percent this month. "What we're seeing now is a subtle shift in underlying technical and psychological sentiment for this market," said Adam Sarhan, chief executive of Sarhan Capital.
As a gauge of investor sentiment, holdings in the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Shares, fell 4.5 tonnes to 872.02 tonnes on Friday. Hedge funds and money managers cut bullish bets in futures and options of US gold markets for the week to Oct. 1, a report by the Commodity Futures Trading Commission showed.
Traders were also monitoring physical demand in Asia, where demand has been subdued following a big rush earlier this year. Premiums in India jumped to a record high of $130 an ounce last week as government restrictions on gold imports squeezed supply during the peak holiday season. In China, premiums on the Shanghai Gold Exchange fell into negative territory. Premiums were as high as $30 in April-May.
Spot silver rose $0.04, or 0.09 percent, to $22.49 an ounce and was on track to rise 4 percent this month. Spot platinum was up $22, or 1.52 percent, at $1,466.90 an ounce on prospects that strikes in South Africa could curb supply. So far this month, it has risen 4.9 percent. Spot palladium was up $5.78, or 0.78 percent, at $745.75 an ounce and is on track to rise 0.33 percent this month.