SINGAPORE: Gold held steady below its record high on Tuesday as investors waited to see if President Barack Obama's appeal for an agreement on stalemated US debt talks would provoke signs of progress, while the ongoing euro zone debt crisis lent support.
Spot gold was little changed at $1,613.40 an ounce by 0308 GMT, slightly firmer after Obama warned that failure to reach an agreement to avert default could cause a deep economic crisis and urged Republican and Democratic leaders to reach a compromise.
US gold edged up 0.1 percent at $1,613.90.
"President Obama tried to add some confidence on the debt talks, but people still have doubt," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
An agreement on raising the US debt ceiling beyond $14.3 trillion could take some heat off gold and trigger a correction to $1,560 to $1,570 level, Fung said.
"But over the medium- to long-term, gold is still going to be on the upside as people will still be seeking safe haven in gold with the problems around the world."
Spot gold hit a record high of $1,622.49 on Monday, and is likely to reach $1,644 in the short term on the chart, Reuters market analyst Wang Tao said.
Last week Standard & Poor's warned there was a 50-50 chance the US AAA credit rating could be cut within three months.
"There is an increasing chance of downgrading, even if the debt ceiling is raised in the last minute," said Ong Yi Ling, an analyst at Phillip Futures in Singapore.
"Unless a long-term, more credible deficit reduction plan comes along, rating agencies will keep the US on negative watch, which will benefit gold."
Underpinning sentiment in bullion, Moody's cut Greece's credit rating further into junk territory on Monday and said it was almost certain to slap a default tag on its debt as a result of a new EU rescue package.
South Africa's National Union of Mineworkers (NUM) said on Monday wage talks with the country's big gold miners had broken down and it would give them a 48-hour strike notice on Tuesday. South Africa was the world's fourth-largest gold producer in 2010, after China, Australia and the United States, Reuters data show.
Holdings in the SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, remained unchanged at 1,241.769 tonnes, while holdings in iShares Silver Trust , the world's biggest silver ETF, rose 42.44 tonnes to 9,891.61 tonnes -- their highest since June 10.
Spot silver was flat at $40.33. It hit $41.05 in the previous session, its highest since May 4 when prices were tumbling from a record high of $49.51 set on April 28.
Silver could rise towards $42 to $43 if gold strengthens further, as investors look for a cheaper alternative to gold, Ong of Phillip Futures said.
Copyright Reuters, 2011
Comments
Comments are closed.