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. (Click on the following link to see
why advisers are increasingly turning to gold and other alternative investments for their clients.)
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.
--Bloomberg News--
