Singapore: Gold was trading near one-week high on Friday and headed for its best weekly gain in two months on hopes that uncertainties in Washington would prompt the Federal Reserve to delay its stimulus tapering. US Congress reached a last-minute agreement this week to increase its borrowing capacity till early next year, averting an historic debt default and ending a partial government shutdown. Gold fell about 4 percent during the US government shutdown, but jumped 3 percent on Thursday after the dollar dropped to eight-month lows and a Chinese rating agency downgraded the US sovereign rating. "(The rebound) is largely due to expectations in the market, when gold prices were dropping for a few days, that the downside was limited," said Songwut Apirakkhit, managing director of Globlex Holding Management in Bangkok, pointing to the potential for further political gridlock. "Even though it was a second-tier rating agency like Dagong, gold gained as the dollar (was) sold off." Prices were also supported on Thursday by two separate bursts of unusually heavy buy orders that lifted prices by USD 40 in minutes. This marks the fifth time in less than two weeks the benchmark US Comex gold futures contract for December delivery has posted sudden, often unexplained, intraday price swings. Spot gold rose 0.2 percent to USD 1,321.66 an ounce by 0648 GMT, recording a near 4 percent gain for the week. Apirakkhit said gold could stay at these levels and possibly push higher as the timeline for the Fed tapering has been pushed out and the United States has not resolved its budget issues. "The keyword here is temporary," said Apirakkhit, referring to the US debt deal. "Since it is not finalised yet, gold can still see some support." The Fed will likely defer any decision to trim its massive bond buys until at least December, two top Fed officials suggested. Economists said the tapering could be delayed until early 2014 as the US recovers from the impact of the government shutdown. Gold's gains supported other precious metals, with silver and platinum headed for their best weekly performance in months.

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