Gold futures have risen as investors fear a potential impasse in US budget talks may bolster demand for the metal.
The most actively traded gold contract, for December delivery, on Wednesday rose $US19.90, or 1.5 per cent, to settle at $US1,336.20 a troy ounce on the Comex division of the New York Mercantile Exchange.
The Senate on Wednesday voted to begin debate on a measure to fund government through most of the rest of the year, the next step in what is expected to be a contentious policy clash.
A stalemate between the Democratic-controlled Senate and Republican House of Representatives could create a new drag on spending and the US economy, potentially raising demand for gold as an alternative asset.
"Gold's focus is shifting to a potential government shutdown," said Fain Shaffer, president of Infinity Trading Corp.
"It looks like we're going to go through this again."
Gold can rise when investors are worried about policy debates in Washington spilling into the economy.
Futures hit a record high less than a month after Standard & Poor's downgraded its rating on US debt in August 2011.
Gold's gains on Wednesday also came as some traders bet US housing data bolstered the case for the Federal Reserve to keep its stimulus in place for longer. Data showed US new-home sales rebounded in August but confirmed that the market cooled a bit during the northern summer.
Some buy gold on the view that it will help shield them from the effects of inflation, and many investors bought the metal as the central bank pumped cash into the financial system in recent years to stoke growth.
"The housing market was pretty hot in June and July, but it seems to be cooling again" as interest rates and home prices rose, Shaffer said. That sentiment helped draw buyers to gold on Wednesday, he said.
Gold futures had retreated for three consecutive sessions through Tuesday after some Fed officials indicated the central bank still may curb its bond purchases soon despite its decision last week to hold the program steady for now.
Analysts with Deutsche Bank said in a note Wednesday that "headwinds for precious metals prices and specifically gold still lie close to the surface".
The bank forecasts an average gold price of $US1,325 an ounce during the last three months of the year, with gains capped by a stronger US dollar and rising interest rates that limit gold's appeal as an alternative asset.
