Gold settled higher on Wednesday as it appeared U.S. lawmakers would strike a last-minute deal to prevent the country from defaulting on its debt.
U.S. Senate negotiations on legislation to raise the country's $16.7 trillion borrowing limit and reopen government agencies are nearing completion, a senior Senate Democratic aide said.
Spot gold was last flat at $1,281 an ounce. It plunged to its lowest since July 10 at $1,251.66 on Tuesday before rebounding. Analysts see technical support around July lows, between $1,235 and $1,240.
U.S. gold futures for December delivery settled $9.10 higher at $1,282.30 an ounce.
"We have heard a couple of times that they were close to reach an agreement but they haven't... nonetheless, investors have been generally positive on a solution happening that gold prices have come under pressure anyway," Natixis analyst Bernard Dahdah said.