* Gold adds about 4 percent for the week, near one-week high
* Market sees delay in tapering on U.S. budget uncertainties
* Dollar index near eight-month low, supports gold prices
By A. Ananthalakshmi
SINGAPORE, Oct 18 Gold was trading near one-week
highs 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.
U.S. 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
Gold fell about 4 percent during the U.S. government
shutdown, but jumped 3 percent on Thursday after the dollar
dropped to eight-month lows and a Chinese rating agency
downgraded the U.S. 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 $40
in minutes. This marks the fifth time in less than two weeks the
benchmark U.S. Comex gold futures contract for December delivery
has posted sudden, often unexplained, intraday price swings.
Spot gold rose 0.2 percent to $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 U.S. 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
Economists said the tapering could be delayed until early
2014 as the U.S. recovers from the impact of the government
Gold's gains supported other precious metals, with silver
and platinum headed for their best weekly
performance in months.
Precious metals prices 0648 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1321.66 2.57 +0.19 -21.07
Spot Silver 21.87 0.03 +0.14 -27.77
Spot Platinum 1437.74 7.84 +0.55 -6.34
Spot Palladium 738.47 -0.03 -0.00 6.72
COMEX GOLD DEC3 1321.50 -1.50 -0.11 -21.14 18606
COMEX SILVER DEC3 21.93 -0.02 -0.10 -27.65 4566
COMEX gold and silver contracts show the most active months
(Reporting by A. Ananthalakshmi; Editing by Richard Pullin and