According to a Wall Street Journal report,gold and silver prices jumped Tuesday as the dollar sank close to a six-week low against the euro amid renewed concerns about U.S. budget talks and continued focus on the Federal Reserve's upcoming monetary-policy meeting.
Gold for February delivery, the most actively traded contract, was recently up $32.80, or 2.7%, at $1,267 a troy ounce on the Comex division of the New York Mercantile Exchange.
Comex silver for March delivery was up 71.9 cents, or 3.7%, at $20.420 a troy ounce.
Both precious metals continued to rebound from recent lows amid speculation that Federal Reserve officials will be unlikely to make deep cuts to the central bank's stimulus program. The Fed's voting members are due to meet Dec. 17 and 18 to review monetary policy, with expectations that the board will weigh reducing the $85 billion a month in bond purchases.
Investors are also looking ahead to the year-end budget talks in Washington, D.C. The U.S. House and Senate budget chairmen have been trying to finalize a small-scale accord on spending cuts and deficit reduction that could set the stage for a wider-ranging deal down the road. However, there are no guarantees the current accord will pass either the Republican-led House or the Democratic-controlled Senate.
Many investors sought out gold during the last federal government shutdown, in October, as concerns about a U.S. sovereign-debt default fanned appetite for an alternative to the dollar.
Gold and silver futures also drew strength from the currency's weakness on Tuesday. The dollar traded near a six-week low against the euro, with the common European currency recently swapping hands at $1.3767, up from $1.3734 earlier.
As the dollar eases, dollar-denominated commodity futures contracts become cheaper for traders who use other currencies.
Some analysts said that part of gold's recent move higher is also fueled by investors who have been bearish gold for the bulk of 2013 and are now closing out those positions as they clear their book ahead of the year end. Traders must purchase a bullish wager, or so-called long position, to neutralize a bearish wager, or so-called short position.
