Gold recovers from early morning fall

After hitting a three-month low of $1,253 per ounce Tuesday morning, gold made a quick recovery to $1,285 by the afternoon.

The spot price slumped to its lowest levels since July as uncertainty over the US government closure boosted the dollar.

spot gold Oct 15

Gold initially lost $20 on the prospect of a Senate deal that would end the deadlock in Washington. But as it became clear that no decision had been made, uncertainty and anxiety boosted the safe-haven metal, allowing it to recover all losses and then some.

The US government has been shut down for 15 days now. If no deal is reached by October 17, the country could default on its debt payments and the dollar could take a major beating. This could spark safe-haven buying of gold.

See also: Gold price pares gains as talk of market manipulation intensifies