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Gold prices gain as investors await U.S. debt talks

Published 10/16/2013, 08:59 AM
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Investing.com - Gold futures were marginally higher on Wednesday, as markets continued to focus on U.S. budget talks amid growing fears of a potential sovereign default.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,280.00 a troy ounce during U.S. morning trade, up 0.55%.

Prices traded in range between USD1,274.00 a troy ounce, the daily low and a session high of USD1,287.10 a troy ounce.

The December contract ended 0.27% lower on Tuesday to settle at USD1,273.20 a troy ounce. Earlier Tuesday, prices fell to USD1,251.00 a troy ounce, the lowest level since July 10.

Gold futures were likely to find near-term support at USD1,251.10 a troy ounce, Tuesday’s low and resistance at USD1,311.80, the high from October 10.

Senate leaders were to resume negotiations on reopening the government and lifting the federal borrowing limit later Wednesday, after a last minute deal put forward by House Republicans collapsed.

Ratings agency Fitch placed its triple-A rating on the U.S. on “rating watch negative” on Tuesday, saying the political impasse has undermined confidence in U.S. economic policy.

The U.S. Treasury has said that if an agreement to raise the USD16.7 trillion debt ceiling is not struck ahead of Thursday’s deadline, the U.S. will face an unprecedented sovereign debt default.

Gold surged to record intraday highs over USD1,900 a troy ounce after the last debt-ceiling debacle in September 2011.

Elsewhere on the Comex, silver for December delivery rose 0.5% to trade at USD21.29 a troy ounce, while copper for December delivery shed 0.85% to trade at USD3.280 a pound.

Copper traders looked ahead to a raft of Chinese economic data on Friday.

The Asian nation is scheduled to release a government report on third quarter gross domestic product, with economists predicting growth of 7.8%. The country will also release data on industrial production and retail sales figures for September.

China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Trade data over the weekend showed that inbound Chinese copper shipments totaled 457,847 metric tons last month, the highest since March 2012. The figure was nearly 18% higher than copper imports in the previous month.

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