"America's fiscal house is still in disorder. U.S. National Debt quietly passed the $17 trillion mark. Gold remains in an enviable position in light of continued loose monetary policies and excessive spending," Carter said
Gold posted its best weekly gain in two months last week after U.S. lawmakers reached a last-minute deal that averted a debt default and reopened government agencies that were shut for 16 days. The metal held near one-and-a-half-week highs above $1,300 an ounce on Monday.
A self-described "cautious bull" on gold for this week and an "optimistic bull" over the long term, Edmund Moy, Chief Strategist at Morgan Gold and a former director of the U.S. Mint said "as long as the United States government spends a lot more than it takes in, the debt ceiling will rise as will the price of gold."
Moy added: "The fundamental issues of a broken fiscal policy and a modest and fragile economic recovery have not changed. Further, the shutdown's impact on the economy will not be known for a few months, suggesting that the Federal Reserve will hold off on any tapering until all the data comes in."
(Read more: The odd reason why gold rose on the Senate deal)
The economic cost of the U.S. shutdown and the knock-on hit to business and consumer morale may mean that the Fed may delay scaling back asset purchases until early next year, keeping the dollar weak and benefiting gold. A weaker U.S. currency makes dollar-denominated gold imports cheaper for buyers paying in currencies like the Indian rupee.
"Factors such as delayed (if any) tapering and a potential near-term economic weakness lend support but the failure to take off despite a sharply weaker dollar points towards a potential retracement next week," said Ole Hansen, Head of Commodity Strategy at Saxo Bank.
Despite optimism of a turnaround in the gold price, the metal's track record as a safe-harbor in the past few weeks - even amid the uncertainty of the U.S. budget impasse - has been erratic and characterized by outflows from exchange-traded funds. Gold has slumped 22 percent this year, and is on course for its first annual decline in 13 years. "The shutdown crisis made no impact on the gold price," said Gaurav Sodhi, Resources Analyst at the Intelligent Investor in Sydney. "We could be in for a period of some weakness. It is extremely unloved."
Gold bears say the metal's over three percent rally last week will fade as investors continue to liquidate holdings in funds such as the SPDR Gold Trust, the world's largest gold-backed ETF, although physical demand from consumers in China and India may limit the losses.
Daniel Hynes, Head of Commodities Research for CIMB in Sydney described gold's jump last week as a "dead cat bounce" after the budget impasse was broken.
(Read more: Wall Street not listening to Washington anymore)
Kelly Teoh, market strategist at IG Markets in Singapore also said gold's rally would be short-lived: "The downward channel is prominent and unlikely to have a change in direction based on the recent bounce. I would expect fresh shorts if it goes higher. The risk-on theme is here to stay until the end of the year and investors are unlikely to shift towards gold with this in mind."
Recent outflows from New York's SPDR Gold Trust underscored the lack of investor faith. The gold-backed ETF reported another 3.3-ton drop in its holdings on Thursday, putting the fund on track for its seventh straight week of outflows. Its holdings have fallen more than 35 percent from their December 2012 peak, and are down nearly 24 tons this month.
"Despite the positive fundamental factors, the ETF outflows still weigh on the prices," saidCommerzbank's Head of Commodity Research Eugen Weinberg. "I expect the price to rise sustainably only when ETF outflows come to an end, which itself is only likely if the price fall stops. The negative dynamism of gold ETFs, which have already shed 33 tons of gold in October, is still ongoing and continues to have a bearish effect," said Commerzbank.
G. Miguel Perez-Santalla, Vice-President Business Development - The Americas at online precious metals exchange BullionVault, said ETF outflows do not dictate the market price. "The Futures market dictates the price," he said. "Of course steady liquidation does not help support it. Yet the lower price of gold has become quite attractive for industry especially jewelers around the world."
Although gold seems to have broken with conventional wisdom and defied the weakness in the U.S. dollar, some see the inverse correlation coming back into force as the greenback goes into what some predict will be a deeper decline.
(Read more: This gold chart is ugly: expert)
"Once the USD Index finally drops below 79.00, more professional investors will finally realize that the dollar's major trend is heading downward again," said Sean Hyman, editor of the Ultimate Wealth Report, a financial newsletter. "Gold stocks are even more hated and oversold than gold itself. So as gold heads higher, gold stocks will outperform even gold."
Technically, the tide may also be turning in favor of the bulls: "There is plenty of madness in the U.S. alone to fuel gold higher," said Matt Fanning, Founder and CIO of Fanvestments LLC. "Although $1,330 seems to be heavy resistance, I am long GLD (the ticker code for the SPDR Gold Trust ETF). I would be inclined to add small positions above $1,340."