* Platinum climbs 1.5 pct as strike, water curbs hit miners
* US shutdown drags on as debt-ceiling deadline looms (Updates prices, adds comment)
By Josephine Mason and Jan Harvey
NEW YORK/LONDON, Oct 4 Gold fell on Friday as the U.S. dollar recovered from two-month lows and investors braced for the political stalemate in Washington to drag on for another week, while platinum rose as water restrictions threatened to roil South African mines.
U.S. House of Representatives Speaker John Boehner said on Friday the House would not vote on a spending bill without conditions to end the government shutdown, and demanded spending cuts in exchange for raising the government's debt ceiling.
The comments suggested the government shutdown would continue for a second week, or until politicians reach a deal on the U.S. debt issue.
"There doesn't seem to be a lot of fear yet priced into financial markets (from the shutdown), and until there is, I don't think gold will do much," Deutsche Bank's global head of commodity research Michael Lewis said.
Spot gold was at $1,310.53 an ounce, down 0.5 percent at 2:25 p.m. EDT (1825 GMT), while U.S. gold futures for December delivery settled at $1,309.9, down $7.7 an ounce, or 0.6 percent. The market notched a loss of over 2 percent on the week.
Moves in most financial markets were muted as the U.S. government shutdown dragged on. U.S. equities edged higher while the dollar recovered from an eight-month low.
Continuing for a fourth day, the partial U.S. government shutdown delayed the release on Friday of nonfarm payrolls data for September, although the postponement had little noticeable impact on prices.
Developments surrounding the raising of the U.S. debt ceiling would have a much greater impact on perceptions of risk, Deutsche's Lewis said. Congress must increase the country's borrowing limit by Oct. 17 or risk default.
A default could hurt U.S. growth expectations and the U.S. dollar, potentially delaying any move by the Federal Reserve to scale back its massive stimulus program which has bolstered gold prices, traders said.
"It'd be difficult to be short gold in this environment. You may be afraid because of all this looming to push the sell button. You might just wait and see," a New York dealer said.
Asian demand for physical gold picked up this week, especially in Japan and Thailand, when prices fell below $1,300 an ounce, but interest waned when the market moved off the lows.
The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Shares, reported a second daily outflow on Thursday of 1.8 tonnes, suggesting investors' appetite for gold remains soft.
SOUTH AFRICAN WATER
Spot platinum was up 1.6 percent at $1,391.5 an ounce and was on track for its biggest one-day rise in 2-1/2 weeks.
South Africa's Department of Water Affairs said on Friday that platinum operations around the mining city of Rustenburg will face curbs on the amount of water they can use to mitigate problems caused by a drought.
That came after number one platinum producer Anglo American Platinum said a strike at its South African operations was cutting output by an average 3,100 ounces a day.
"With half the industry out on strike, plus the news we're hearing about water restrictions, platinum has had something of a step up," Mitsubishi analyst Jonathan Butler said.
South Africa is the source of three out of four ounces of the world's platinum. Threats to output there from strikes and other outages has helped the autocatalyst metal outperform gold this year, despite weakness in demand from European carmakers.
Spot palladium eased 0.08 percent to $702.02 an ounce, while spot silver fell 0.23 percent to $21.73 an ounce.
Russia's Norilsk Nickel, the world's biggest palladium producer, said on Friday its palladium production may increase by up to 2 percent by 2016. (Additional reporting by A. Ananthalakshmi in Singapore; Editing by David Cowell and Bernadette Baum)