Neither the U.S. government shutdown nor the looming debt-ceiling deadline has been enough to boost demand for gold, which slumped to a near two-month low this week. So, why isn't the safe-haven asset catching a bid?
According to Dennis Gartman, publisher of the Gartman Letter, the government shutdown is being viewed by some as a deflationary force in the world's largest economy. This is negative for gold as it is often purchased as a hedge against inflation.
"The economy seems weaker. With the closing of the government, and problems going on in Washington, that's a deflationary impact, and that weighs upon the gold market. If you could get strength in the economy you might actually get a bid to the gold market," Gartman told CNBC's "Futures Now" on Thursday.
(Read more: Black October Coming For Gold?)
Gold prices tumbled as low as $1,280 an ounce following news of the government shutdown earlier this week, to settle around $1,316 on Friday.
Factors that could spark a fresh rally in gold include renewed tensions in the Middle East or the Federal Reserve becoming more accommodative than it has been, he said.
Simona Gambarini, associate director of research at ETF Securities, said many investors are waiting on the sidelines at the moment, but could enter the gold market if risks of a debt ceiling crisis grow.
"Investors are on hold. Whoever is in the gold market already, sticks to that. Whoever is not, is waiting to see whether the debate on the debt ceiling is going to get worse, and that's probably when most investors will get in."
(Read more: US budget uncertainty may limit gold's decline)
Time to buy?
Jonathan Barratt, founder of the commodities newsletter Barratt Bulletin said gold's performance is a surprise given the number of risks stemming from the U.S.
"The market is a little complacent at the moment, the more time that passes the more nervous people will get," he said. "The reality I feel will hit traders when we do not get employment data out of the U.S."
Barratt, who is bullish on the outlook for gold, expects prices will rise to $1,470 in the coming weeks. If gold breaches this level, it could hit $1,520, he said.
Mike Harrowell, senior resource analyst at BBY recommends buying gold at current levels. "We think growth will reassert, there will be an increase in the debt ceiling limit and this current issue with the government will wash away. We would look at this as a buying opportunity, with a price target [around] $1,450," he said.
Todd Gordon, founder of TradingAnalysis.com, however, is skeptical that gold will find support in the near term. "I'm short right now. We have yields down, the dollar's down, stocks [are] down. That's a trifecta for gold to rally and it's not," he said. "When something should be happening and it's not, you got to trade what you see, and not what you think."
—By CNBC's Ansuya Harjani; Follow her on Twitter @Ansuya_H