Gold traded within 1 percent of a record as U.S. policy makers pushed competing proposals to increase the nation’s debt ceiling before an Aug. 2 deadline in a bid to prevent a default that may roil financial markets. Spot bullion, which reached an all-time high of $1,628.05 an ounce yesterday amid the political wrangling, traded 0.2 percent higher at $1,616.55 at 11:30 a.m. in Singapore. Futures in New York were little changed at $1,618.70 an ounce after reaching a record $1,631.20 yesterday. U.S. lawmakers remain deadlocked. Republican leaders plan to bring House Speaker John Boehner’s reworked deficit-cutting plan to a vote today, while Senate Majority Leader Harry Reid called his alternative “the only true compromise.” Asian stocks dropped today extending losses in the U.S. “There are major fundamental issues around the size of debt, the inability to control spending,” Sean Boyd, chief executive officer of Agnico-Eagle Mines Ltd., North America’s fifth-largest gold producer, said on Bloomberg Television’s “Taking Stock.” Debasement of paper currencies “is forcing people to start to look at gold,” Boyd said. The Treasury has said Congress must act by the deadline to raise the $14.3 trillion debt ceiling or risk the government not being able to meet its obligations. A U.S. default would be “devastating” to consumers as interest rates climb, said Michael Duke, chief executive officer of Wal-Mart Stores Inc. Holdings of the metal in exchange-traded products rose for a third day to a record 2,131.378 metric tons yesterday, data compiled by Bloomberg show. The dollar was little changed today against a six-currency basket. ‘Reach Consensus’ “The heightened risk-aversion mode in the market is supportive of gold but we think it has gone up too quickly and we would like to see a pullback,” said Wang Xiaoli, chief investment strategist at Citic Futures Co., who was ranked fifth in a poll of China gold analysts by the Futures Daily and Securities Times. “That may come when U.S. politicians reach consensus on their debt.” Moody’s Investors Service, Standard & Poor’s and Fitch Ratings have said they will cut the U.S.’s AAA rating should a failure to raise the borrowing limit lead to a default. BlackRock Inc., Franklin Templeton Investments and Loomis Sayles & Co. joined Pacific Investment Management Co. in warning that the U.S. faces losing its top-level debt ranking. Spot silver gained 0.4 percent to $40.42 an ounce after reaching a 12-week high yesterday. Cash platinum declined 0.5 percent to $1,787.10 an ounce, after touching the highest price since June 13 yesterday. Palladium advanced 0.2 percent to $827.50 an ounce after climbing to a five-month high yesterday. To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net

Source