Gold prices expected to rise

Gold prices are set for a rebound as the US government shutdown boosted the precious metal's safe haven status, according to a survey.

Ten out of 21 analysts polled by the Kitco Gold Survey said they expected gold prices to go up, as the markets fretted about the shutdown.

Prices had risen 1.2% a week ago on renewed buying interest stirred by US budget fears and the uncertainty surrounding the future pace of the Federal Reserve's monetary stimulus program.

US gold futures for delivery in December hovered at $1,309.90 an ounce, Reuters data showed. For the week as a whole, US gold futures fell 2.2%.

Gold prices have so far failed to log gains amid the US shutdown. Director of Commercial Hedging with Walsh Trading, Sean Lusk told Kitco News that the absence of Chinese buying was partly responsible.

Markets in China were closed for the National Day Golden Week holidays, which meant that gold buyers in the world's second-largest gold market were off counters.

For now, it's likely a "case of selling everything when things look bad as even the safe-haven assets such as gold are not shining in this environment," Chief Executive Officer at Sharps Pixley, Ross Norman told Marketwatch. "Putting a rationale to that is difficult but that is a feature of the 'Frankenstein' economy - man-made and everything a bit weird."

"We may have another bout of brinkmanship on the debt ceiling which as you may remember, drove gold to an all-time high mid 2011.

While we don't expect the same levels, it will certainly put some pressure on those running short positions," Norman said.

The resumption of gold buying in China and continued buying in India, the world's top gold importer, could also support gold prices. India imported 7.24 tonnes of gold in September, more than double August's purchase of 3.38 tonnes, according to government data.