* Bank of Korea bought 25 tonnes of gold, first time since 97-98
* Growth worries offset relief over U.S. debt deal; gold supported
* Coming Up: U.S. ICSC chain stores; 1145 GMT (Updates prices, quotes)
By Rujun Shen
SINGAPORE, Aug 2 (Reuters) - Gold edged higher on Tuesday, supported by a purchase of 25 tonnes of the precious metal by South Korea's central bank, while investors watched the outcome of a vote on the U.S. debt deal.
South Korea's central bank said it bought the gold between June and July to diversify its foreign reserves despite high prices, marking its first purchase in more than a decade and taking its total gold holdings to 39.4 tonnes.
"This news reiterates the fundamental view that most investors, asset managers, and even central banks hold true -- that gold remains the quintessential currency hedge, a stabilizing asset for portfolios, and a safe haven in uncertain economic times," said David Meger, director of metals trading at Vision Financial Markets, a futures broker based in Chicago.
Market reaction to the news was muted, as investors continued to focus on the U.S. debt ceiling deal, which is headed towards a congressional vote.
Spot gold added 0.35 percent to $1,623.79 an ounce by 0623 GMT, off an intraday low of $1,607.69 on Monday.
The physical market saw a mixture of buying and selling, with premiums for gold bars in Singapore steady at between 20 and 80 cents to the spot London prices.
"There's no clear direction. I am surprised that we still some buying despite the high prices, but we also see sales of physical gold," said a dealer in Singapore.
U.S. gold
"The Bank of Korea purchase is absolutely no surprise, because in the past two to three years we always heard that Asian central banks had been buying gold," said a U.S.-based trader.
"It is positive for the market, but more for long-term bulls."
Gold is expected to trade sideways during the day when investors weigh the outcome of the U.S. debt deal vote against the latest poor economic data, the trader added.
U.S. manufacturing grew at its slowest pace in two years in July as new orders contracted, casting doubt on expectations the faltering recovery would quickly regain steam.
Risk appetite might return after the U.S. Congress passed the bill to raise the country's borrowing limit, but the gloomy economic outlook in the world's largest economy combined with an ongoing euro zone debt crisis could depress such sentiment, traders and analysts said.
"Gold should be lower after the U.S. debt ceiling deal is reached, but it remains firm as people don't trust the dollar and would still like to put their money in gold," said Peter Fung, head of dealing at Wing Fung Precious Metals based in Hong Kong.
The safe-haven Swiss franc gained on Tuesday on worries about the global economy even as the U.S. looked to have averted a debt default after the House of Representatives approved an 11th hour deal to raise the government's borrowing limit.
South African gold mine workers and producers were to resume wage talks on Tuesday aimed at ending a strike that started last week.
"When prices are high, miners want to get a slice of the pie not just in South Africa, but in Chile and elsewhere, which could be a theme in the next few months as long as prices stay high," said a Singapore-based trader.
"If we see another sustained rally, scrap supply may dry up. If mine supply decreases, things will start to look interesting."
Precious metals prices 0623 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1623.79 5.69 +0.35 14.40 Spot Silver 39.71 0.46 +1.17 28.68 Spot Platinum 1789.74 1.24 +0.07 1.26 Spot Palladium 827.53 2.28 +0.28 3.51 TOCOM Gold 4043.00 7.00 +0.17 8.42 78817 TOCOM Platinum 4504.00 -34.00 -0.75 -4.09 10491 TOCOM Silver 98.60 0.30 +0.31 21.73 518 TOCOM Palladium 2075.00 -30.00 -1.43 -1.05 234 #VALUE! #VALUE! Euro/Dollar 1.4229 Dollar/Yen 77.32 TOCOM prices in yen per gram. Spot prices in $ per ounce. COMEX gold and silver contracts show the most active months
(Additional reporting by Frank Tang in New York; Editing by Clarence Fernandez)