Gold Futures Rise to Record Amid Impasse on U.S. Debt Accord, Dollar Slump

Photographer: Ron D'Raine/Bloomberg

Gold surged to an all-time high in New York as investors sought to protect their wealth against the possibility of a U.S. default that may come as soon as next week amid a standoff over the country’s $14.3 trillion debt limit. Close

Gold surged to an all-time high in New York as investors sought to protect their wealth... Read More

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Photographer: Ron D'Raine/Bloomberg

Gold surged to an all-time high in New York as investors sought to protect their wealth against the possibility of a U.S. default that may come as soon as next week amid a standoff over the country’s $14.3 trillion debt limit.

Gold futures rose to a record $1,631.20 an ounce as the impasse on the U.S. debt ceiling boosted demand for the precious metal as a haven.

The cost of insuring U.S. debt rose to a 17-month high, and the dollar fell to a record against the Swiss franc as congressional leaders offered competing budget plans. Moody’s Investors Service, Standard & Poor’s and Fitch Ratings have said they will cut the U.S.’s top-level credit rating should a failure to raise the debt ceiling lead to a default.

Government securities, the traditional area of safety, are now at risk, so that’s why you’re seeing gold grind higher,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “The level of U.S. government borrowing has caused the erosion of the dollar and adds more fuel to the metal’s rally.”

Gold futures for December delivery rose $8.90, or 0.5 percent, to $1,628 at 10:33 a.m. on the Comex in New York. In July, the price has climbed 8.3 percent, heading for the biggest gain since November 2009.

Holdings of gold in exchange-traded products rose 0.3 percent to a record 2,128.229 metric tons yesterday, data compiled by Bloomberg show.

Silver futures for September delivery rose 57.7 cents, or 1.4 percent, to $41.275 an ounce on the Comex.

Platinum futures for October delivery gained $8.80, or 0.5 percent, to $1,816 an ounce on the New York Mercantile Exchange. Palladium futures for September delivery climbed $8.35, or 1 percent, to $844.45 an ounce.

To contact the reporters on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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