Gold Drops From Record on Optimism Congress to Approve Debt Deal

Gold declined from a record in New York on optimism that Congress will pass a compromise to raise the U.S. debt limit and prevent a default, curbing demand for the metal as an investment heaven.

Leaders of both parties agreed on a plan to raise the debt ceiling by at least $2.1 trillion, President Barack Obama said yesterday. The House plans votes today on the agreement and the Senate may follow. Senate Majority Leader Harry Reid said he expects a vote “hopefully during” today’s session.

“Gold is lower on the debt deal,” Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago, said today in a telephone interview.

Gold futures for December delivery fell $9.50, or 0.6 percent, to close at $1,621.70 an ounce at 1:48 p.m. on the Comex in New York. The price climbed to a record $1,637.50 on July 29.

“There still remains some pessimism that the deal could fall at the last hurdle,” James Moore, an analyst at in London, said in a report. “But given the scale of gains posted in recent weeks, the yellow metal is vulnerable to a deeper correction should the deal be given full approval.”

Gold has gained 14 percent this year as debt woes escalated in the U.S. and Europe and amid signs of a faltering global economy. Manufacturing indexes from Asia to the U.S. fell in July as demand weakened.

Silver futures for September delivery fell 79.7 cents, or 2 percent, to $39.309 an ounce on the Comex.

Palladium futures for September delivery rose $1.80, or 0.2 percent, to $829.50 an ounce on the New York Mercantile Exchange.

Platinum futures for October delivery added $9.30, or 0.5 percent, to $1,794.60 an ounce on the Nymex.

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