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PRECIOUS-Gold hits record; US debt uncertainty grows

Published 07/27/2011, 03:26 AM
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* Spot gold, U.S. gold reach record highs

* U.S. House of Representatives delays vote

* Spot gold seen to target $1,644 -technicals

* Coming up: U.S. durable goods, June; 1230 GMT (Updates prices)

By Rujun Shen

SINGAPORE, July 27 (Reuters) - Spot gold hit an all-time high on Wednesday, for the sixth time in two weeks, as worries grew whether the United States could avert a debt default while its two key political parties were still locked in stalemated talks to raise its debt ceiling.

Spot gold rose as high as $1,625.24, before easing to $1,624.19 by 0709 GMT. It was up in 16 of this month's 19 trading sessions so far.

U.S. gold also hit an all-time high at $1,625.8.

The U.S. House of Representatives decided to postpone a vote on a plan to raise the debt ceiling until Thursday at the earliest, narrowing the chances for a deal to avert a debt default.

"The same arguments about potential government bond fallout are still being made," said a Singapore-based trader, "but people are on the sidelines ahead of the August deadline waiting to see whether or not the U.S. is going to avoid a technical default."

Investors have become increasingly cautious as great volatility is seen ahead of the Aug. 2 deadline however, he added.

Turmoil in the currency market also helped gold attract some interest. The dollar sank to a three-month low against a basket of major currencies.

"It's ambiguous what currencies are the so-called haven in the middle of all the problems in the West," the trader said.

A small majority of economists polled by Reuters said the United States would lose its top-notch AAA credit rating from at least one major rating agency.

Dealers reported muted reaction on Asia's physical market to gold's rally, as buyers and sellers alike cautiously watch the outcome of the U.S. debt talks.

"There has been some selling and very small volume of buying, and people wait to see if the U.S. will default," said Ronald Leung, physical dealer at Lee Cheong Gold Dealers in Hong Kong, adding that premiums for gold bars have fallen a little from last week to 50 cents to $1.1 per ounce over spot prices.

Platinum group metals scored multi-month highs, tracking strength in gold. Spot platinum hit $1,812.5, its highest since June 13. It eased to $1,808.45, up 0.4 percent.

Spot palladium reached a five-month high of $842 an ounce, and was trading at $839.97.

"As gold is at such lofty levels, we might see some substitute effect (in PGM). There is very strong potential that platinum group metals continue to move north," said the Singapore-based trader.

Spot palladium had risen 11.5 percent so far this month, the second-best performer after silver, which had gained nearly 19 percent in July. Platinum lagged behind other precious metals with a 5-percent month-to-date rise.

Precious metals prices 0709 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1624.19 5.39 +0.33 14.42 Spot Silver 41.15 0.30 +0.73 33.34 Spot Platinum 1808.45 7.90 +0.44 2.32 Spot Palladium 839.97 7.97 +0.96 5.06 TOCOM Gold 4059.00 1.00 +0.02 8.85 38099 TOCOM Platinum 4562.00 47.00 +1.04 -2.85 9723 TOCOM Silver 101.60 0.50 +0.49 25.43 610 TOCOM Palladium 2102.00 64.00 +3.14 0.24 854 COMEX GOLD AUG1 1624.50 7.70 +0.48 14.29 19795 COMEX SILVER SEP1 41.19 0.49 +1.20 33.11 8105 Euro/Dollar 1.4481 Dollar/Yen 77.66 TOCOM prices in yen per gram. Spot prices in $ per ounce. COMEX gold and silver contracts show the most active months

(Reporting by Rujun Shen; Editing by Clarence Fernandez)

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