Gold Price Gains 3% in Early U.S. Trading, Price around $1,320

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(Reuters) – The last-minute deal between the U.S. President and the Congress to avoid U.S. debt default sent gold price jumping over $1,300 per ounce by nearly $18 during early U.S. trading hours today on Thursday. Spot gold closed the previous trading session around $1,282 per ounce, making around $36 gains in one hour.

Gold price surged sharply on heavy technical short coverings. The delaying of the debt crisis till next February and funding the government till 15 January seemed to spark weak safe-haven demand. Moreover, the U.S. dollar fell against major currencies by 0.9% and the first U.S. downgrade from the Chinese rating agency, Dagong, from A to A- during the current debt crisis.

The Federal Reserve probably won’t start tapering its bond purchasing program any time soon as no real solution have been agreed upon yet. During the partial government shutdown, the lack of economic data sent the fed plans to cut economic stimulus by the end of 2013 to late first quarter in 2014, according to analysts. Investor’s eyes are all on the next U.S. economic data release, with the weekly jobless claims as their focus.

However, SPDR Gold Trust holdings, the world’s largest gold backed ETF, fell to a four years low at 885.53 tonnes, liquidating 20.46 tonnes since the beginning of October 2013. On the other hand, investment management firm FinEx Group and the Moscow Exchange said they had launched Russia’s first gold-backed exchange-traded fund.