Answer:
Nació.
Step-by-step explanation:
IN spanish we use the word Nació, to indicate the nationality of someone and then it often is followed for where that person is living now, in this case the sentence says:
Gustavo________ Mexico but lives in the USA.
So the correct option would be "Was born in" or nació, specially because it has the "but" after mexico, that means that he doesn´t live where he grew up.