July 25, 2011 / 12:25 AM / 8 years ago

Gold hits new high as debt talks stall

SYDNEY (Reuters) - Gold rose to fresh record high on Monday as talks over lifting the debt ceiling appeared to be stalling just days before the August 2 deadline, raising the prospect of a debt default.

Spot gold climbed as high as $1,622.49 an ounce versus Friday’s high of $1,607.01 and the previous record of $1,609.51 before easing back to $1,614.66 by 0007 GMT, Reuters data showed.

President Barack Obama and congressional leaders struggled late on Sunday to break a partisan deadlock on a budget deal and bullion dealers said investors were ditching stocks in favor of safe haven assets, such as gold, until the outcome of talks become clearer.

A slightly weaker U.S. dollar at the start of early trading in Asia gave gold its initial lift, though bullion continued to firm even as the greenback later stabilized, according to bullion dealers.

“Gold is moving on its own,” a dealer said.

U.S. gold also hit a fresh record high at $1,624.30 an ounce.

Tokyo shares .N225 were 0.7 percent lower in early trade on Monday while the Australian market eased 0.5 percent.

Investors were putting money in what they consider more stable investments, such as exchange-traded gold funds rather than equities with their perceived risks from market fluctuations and the individual company, according to London-based stockbroker Ambrian Partners.

“In the absence of deficit deal then the pressure is all on the greenback in the short term at least,” said BNZ currency strategist Mike Burrowes.

“But if they come up with a decent, credible plan for deficit reduction in the long term then that could pave the way for some U.S. dollar strength.”

Reporting by Jim Regan; Editing by Balazs Koranyi

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