Gold settles 3% higher, dollar drops after US debt

Gold settled more than 3 percent higher on Thursday, aided by dollar weakness and belief that a temporary deal to avoid historic U.S. debt default might also prompt the Federal Reserve to hold back from reducing its additional monetary stimulus.

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

Spot gold surged to $1,321 per ounce up more than 3 percent on the day, while U.S. gold futures for December delivery settled 3.2 percent higher at $1,323.00.