July 25 (Bloomberg) -- 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.
Republicans and Democrats are preparing separate plans to raise the debt limit to avoid 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 $10.70, or 0.7 percent, to settle at $1,612.20 at 1:47 p.m. on the Comex in New York. The previous record was on July 19.
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.
Gold is up 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 23.9 cents, or 0.6 percent, to $40.361 an ounce on the Comex.
Palladium futures for September delivery rose $2.60, or 0.3 percent, to $809 an ounce on the New York Mercantile Exchange. Platinum futures for October delivery fell $4.40, or 0.2 percent, to $1,794 an ounce on Nymex.
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