SHUTDOWN: US won't sell $340 billion of gold

The gold price on Friday continued to hover around $1,320 level where it has been stuck for most of the week.

Gold has failed to capitalize on political turmoil in the US and hints that the country's central bank may take years to unwind its near $4 trillion stimulus program.

Gold was expected to benefit from its status as a safe haven in times of trouble, but that hasn't happened.

Neither has the metal's attraction as a hard asset and hedge against inflation amid all the easy money flooding markets panned out.

While many large funds and retail investors may be abandoning gold there is one institution that isn't selling.

The US Treasury this week reiterated its policy on the 8,100 tonnes or $340 billion worth of gold in its vaults.

Despite the crisis in Washington "selling gold would undercut confidence in the U.S. both here and abroad and would be destabilizing to the world financial system," according to the Treasury.

MarketWatch quotes Josh Strauss, co-manager of the Appleseed mutual fund as saying the Treasury’s admission is extraordinary:

"With gold on the ropes this year, investors are increasingly questioning the intrinsic value of gold," he says. Given the craziness in D.C., it seems to me that investors should really be questioning the intrinsic value of paper dollars backed by feckless promises."