Gold futures hit another record high as lawmakers failed to reach an agreement on the raising of the US debt limit. It is possible for the nation to reach a default as early as August 2nd if an agreement is not made.
By Pham-Duy Nguyen and Nicholas Larkin
Jul 25, 2011 7:42 AM MT
Gold futures climbed to a record $1,624.30 an ounce as U.S. lawmakers failed to reach an agreement on raising the federal debt limit, boosting demand for the metal as a haven investment.
U.S. House Speaker John Boehner plans to press ahead with a two-step debt-limit extension that President Barack Obama has threatened to veto, fueling concern the nation is lurching toward a default as early as Aug. 2. Greece’s credit rating was cut three notches by Moody’s Investors Service. Europe’s debt woes drove gold to all-time highs in euros and pounds last week.
“Gold is feeding off the uncertainty of the debt negotiations,” Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “Gold is in a ‘can’t lose’ situation with the debt negotiations because regardless of the outcome, the dollar is going to suffer.”
Gold futures for August delivery rose $14.20, or 0.9 percent, to $1,615.70 at 10:40 a.m. on the Comex in New York. The previous record was on July 19.
Republicans and Democrats prepared competing plans for raising the U.S. debt ceiling. Mohamed A. El-Erian, whose Pacific Investment Management Co. runs the world’s biggest bond fund, said the U.S. may lose its AAA debt rating even if lawmakers avoid a default.
Before today, gold rose 13 percent this year, heading for the 11th straight annual gain. Investors boosted holdings in exchange-traded products backed by the metal to a record 2,122.6 metric tons on July 20.
Silver futures for September delivery rose 40.3 cents, or 1 percent, to $40.525 an ounce on the Comex.
Palladium futures for September delivery fell $1, or 0.1 percent, to $805.40 an ounce on the New York Mercantile Exchange. Platinum futures for October delivery dropped 60 cents to $1,797.80 an ounce.
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