SINGAPORE — Gold hit a record high above $1 622 an ounce yesterday, while the dollar steadied and Asian stocks slipped as investors piled into bullion over fears of a possible US debt default as the debt ceiling talks in Washington stalled.
Spot gold, which has risen nearly 14% so far this year, climbed more than 1% to a record of $1 622, 49 an ounce, before easing to $1 615, 66 by 0621GMT. US gold also hit a record at $1 624,30. It was last quoted at $1 616,50.
Clocks are ticking towards the August 2 deadline for US debt talks, while President Barack Obama and congressional leaders struggled late on Sunday to break a partisan impasse.
“Markets are focusing on whether the negotiations will be resolved,” said Natalie Robertson, a commodities analyst at ANZ.
“At this time, we’ll see continued volatility and increased safe-haven buying in gold.”
Hedge funds and other large speculators last week boosted their bullish bets in US gold futures to the highest in nearly two years as gold rallied on the eurozone’s debt crisis and uncertainties around the US debt talks.
Rating agency Standard & Poor’s last week reiterated that there was a 50-50 chance the US AAA credit rating could be cut within three months.
Technical analysis suggested gold could touch $1 688 per ounce in four weeks, said Reuters market analyst Wang Tao. Concerns over the ongoing eurozone debt crisis and worries about US recovery have led analysts to lift their forecast for gold prices for 2011 and 2012, a Reuters poll showed.
However, gold could potentially suffer a sell-off if the US reaches an agreement on the debt ceiling, as some traders expected the possibility of a US default to be rather limited.
“If the US defaults, gold will go up. If they manage to deal with it, we may see gold come down quite quickly,” a trader based in Singapore said.
Spot gold had rallied in 14 of this month’s 17 trading sessions, and was up 7,6% from the end of last month.