WASHINGTON (dpa-AFX) - Gold surged more than 1 percent to hit a new record high above $4,000 an ounce on Wednesday despite a stronger dollar, which surged to a sex-week peak amid risk aversion in markets.
Spot gold jumped 1.3 percent to $4,034.83 an ounce in European trade, while U.S. gold futures were up 1.3 percent at $4,057.40.
The rally in gold prices is driven by concerns over the U.S. economy, ongoing political turmoil in France, expectations of increased fiscal spending in Japan and continued gold purchases by global central banks.
Investors were also reacting to a flurry of commentary from Federal Reserve officials.
Ther U.S. government shutdown continues with no progress in the deadlock between the two chambers of the U.S. Congress.
Strong disagreements between Republicans and Democrats over the extension of Obamacare subsidies has led to the suspension of non-essential government services across the U.S.
The Trump administration has warned of no guaranteed back pay for federal workers as the shutdown headed into its eighth day.
On Tuesday, Fed officials Kashkari and Miran backed two rate cuts this year, while Schmid and Goolsbee argued against more rate cuts given sticky inflation and tariff-driven price pressures.
Fed Chair Jerome Powell is due to speak on Thursday at the Community Bankers Conference in Washington, D.C.
According to the latest data from the World Gold Council (WGC), central bank gold buying rebounded in August, with global reserves increasing by 15 tons during the month.
Elsewhere, data from the People's Bank of China (PBOC) revealed that the country's gold holdings rose to 74.06 million fine troy ounces at the end of September, up from 74.02 million a month earlier.
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