Gold price hit a three-week high on Friday, boosted by expectations U.S. monetary policy would remain loose after President Barack Obama's re-election and a looming fiscal cliff that could slash U.S. public spending.
Since the U.S. elections on Tuesday investors have become worried that Washington's politicians may struggle to find a compromise to cut the budget deficit before nearly $600 billion worth of spending cuts and tax increases kick in early in 2013.
Markets are also watching the debt ceiling, which needs to be raised to avoid a government shutdown.
Spot gold was at $1,732.09 an ounce by 1150 GMT, up 0.12 percent, having earlier touched a three-week peak of $1,737.60, while U.S. gold edged up 0.39 percent to $1,732.70.
A stronger dollar offset further upside in gold by making the yellow metal more costly in other currencies.
Gold prices hit a 2-1/2 week high on Wednesday after Obama's re-election gave markets a boost by ending weeks of political uncertainty, and since extended gains to the three-week peak as concerns over the fiscal cliff intensified.
This is a question of a safe haven bid for gold in times of economic uncertainty, said Nic Brown, head of commodities research at Natixis.
It is a recognition that the negotiations between Obama and Congress will be difficult. The two political parties come from diametrically opposed positions on this issue.
Brown said the Obama victory signalled a continuing environment of relaxed monetary policy, which was likely to underpin gold prices.
An Obama victory enhances the likely longevity of ongoing quantitative easing, he said.
Money printing by central banks boosts gold's appeal as it keeps interest rates at a low level, reducing the opportunity cost of holding a metal that has no yield outside its actual value.
Spot gold is likely to gain more to $1,749 per ounce, driven by an upward wave c, according to Reuters market analyst Wang Tao.
China's economy strode further along the road of recovery from its slowest growth in three years, data for October showed on Friday, as infrastructure investment accelerated and output from the country's factories ran at its fastest in five months.
China's gold demand is expected to grow 1