Gold dips as dollar gains on hopes for end to U.S. fiscal deadlock

Investing.com ג€' Gold prices noved lower on Tuesday as the dollar regained strength amid hopes that lawmakers and the White House will negotiate an end to a spending stalemate that has shut down the U.S. government and is opening the door to defaults in the coming weeks.

The deadlock has weakened the dollar, which tends to trade inversely with gold.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,322.90 during U.S. afternoon hours, down 0.17%.

Gold prices hit a session low of USD1,316.10 a troy ounce and high of USD1,330.10 a troy ounce.

Gold futures were likely to find support at USD1,308.80 a troy ounce, Monday's low, and resistance at USD1,375.10, the high from Sept. 19.

The December contract settled up 1.16% at USD1,325.10 a troy ounce on Monday.

Despite a government shutdown in its second week, markets grew a little less worried that the deadlock will affect negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by Oct. 17, after which the risk of default rises.

While the White House and congressional Republicans were unable to agree on terms to fund the government, talk both sides are making plans to raise the debt ceiling and avoid default sparked some relief demand for the dollar on Tuesday and sparked a round of profit taking for gold.

A U.S. default could roil markets and slow U.S. recovery by further eroding confidence in Washington's ability to craft economic policy,

Elsewhere on the Comex, silver for December delivery was up 0.10% at USD22.408 a troy ounce, while copper for December delivery was down 0.07% and trading at USD3.294 a pound.

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