Tags: Gold | Record | Congress | Debt

Gold Surges to Record $1,637.50 as Congress ‘Plays Chicken’ on Debt

Friday, 29 Jul 2011 03:51 PM

Gold futures rose to a record $1,637.50 an ounce on demand for an investment haven amid mounting concerns on the U.S. debt impasse and signs of a faltering economy.

U.S. lawmakers are offering rival plans to avert a default as the Aug. 2 deadline for raising the $14.3 trillion debt limit nears. A government report today showed that gross domestic product rose less than forecast in the second quarter, driving the dollar lower. Gold had the biggest monthly gain since November 2009.

“The economy is weak, and these guys in Washington are playing chicken with the debt ceiling,” Matt Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “It’s not a good mix, and gold may be one of the safe harbors that people find.”

Gold futures for December delivery rose $15, or 0.9 percent, to settle at $1,631.20 at 1:50 p.m. on the Comex in New York. The metal, up 8.5 percent in July, had four straight weekly advances.

The Standard & Poor’s 500 Index headed for its third straight monthly loss, the longest slump since 2008. The dollar was down for the third consecutive week against a basket of six major currencies.

Gold has climbed 15 percent this year, heading for the 11th straight annual gain. Yesterday, holdings in exchange-traded products backed by the metal rose 0.9 percent to a record 2,150.5 tons, data compiled by Bloomberg show.

‘Ability to Govern’

“People want to own gold,” Adam Klopfenstein, a senior strategist at Lind-Waldock, a broker in Chicago, said in a telephone interview. “Investors want something tangible to diversify away from U.S. assets. Everyone is uncertain about what’s going to become of the U.S. economy and our ability to govern and control our debt.”

The Federal Reserve has kept its benchmark interest rate at zero percent to 0.25 percent since December 2008 and bought back Treasurys to help bolster the U.S. economy. Moody’s Investors Service, Standard & Poor’s and Fitch Ratings have said they will cut the nation’s top-level credit rating should a failure to raise the debt ceiling lead to a default.

Silver futures for September delivery climbed 31.2 cents, or 0.8 percent, to $40.106 an ounce on the Comex, little changed for the week. The price gained 15 percent in July.

Platinum futures for October delivery declined $7.10, or 0.4 percent, to $1,785.30 an ounce on the New York Mercantile Exchange, down 0.7 percent this week. The price still climbed 3.4 percent in July.

Palladium futures for September delivery fell 40 cents to $827.70 an ounce. The metal gained 2.6 percent this week and climbed 8.8 percent in July, the most this year.

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Gold futures rose to a record $1,637.50 an ounce on demand for an investment haven amid mounting concerns on the U.S. debt impasse and signs of a faltering economy. U.S. lawmakers are offering rival plans to avert a default as the Aug. 2 deadline for raising the $14.3...
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2011-51-29
Friday, 29 Jul 2011 03:51 PM
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