The budget impasse in Washington been the primary concern among brokers for the past two weeks.
Some have dropped gold positions because it is used as a hedge against inflation and lack of a budget deal was predicted to push the U.S. economy into a recession, which would eliminate the need for inflation protection.
Traders were also selling to make money. Gold closed the year up about 7 percent, despite a drop in the past month.
On the New York Mercantile Exchange, gold for February delivery added $18.50 or 1.12 percent to $1,674.40 per troy ounce.
Silver for March delivery gained 44 cents or 1.47 percent to $30.42 an ounce.
The euro fell to $1.319 from Friday's $1.3217. The dollar rose to 86.74 yen from 85.97 yen.
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