Gold jumps; Budget deal seen delaying stimulus cut

NEW YORK (Oct 17)  Gold prices surged more than 3 percent on Thursday as the dollar stumbled, with bullion boosted by belief that a temporary deal to avoid a historic U.S. debt default might prompt the Federal Reserve to delay reducing its additional monetary stimulus.

Unusually, significant volumes were also seen on COMEX gold futures in early European trading hours, with more than 17,000 lots traded in 10 minutes alone.

Spot gold surged 3.3 percent to about $1,323. U.S. gold futures for December delivery hit a high of $1,322.90 and were last 3.1 percent higher.

The dollar fell against a basket of major currency rivals, and was last down 0.9 percent, with dealers citing the budget deal and Chinese rating agency Dagong downgrading the United States to A- from A.

Congress passed a last-minute deal to avert a debt default for now, with analysts saying weeks of uncertainty that knocked investor confidence would have dented U.S. growth prospects.