MC:Gold pauses after hitting records; US debt in focus
Spot gold took a breather on Thursday after hitting record highs for two sessions this week, while sentiment remained supported by the deadlocked US debt ceiling talks.
Top Republicans and Democrats worked behind the scenes on Wednesday on a compromise to avert a crippling US default, looking to salvage a last-minute deal from rival debt plans that have little chance of winning broad congressional approval on their own.
With the August 2 deadline just days away, the United States is in increasing danger of losing its top-notch credit rating, even if a deal to avert default is reached, analysts and traders said.
"It looks like a downgrade has been priced in with all the sell-off in the dollar," said a Singapore-based trader. "Gold remains a good trade overall with some people targeting USD 1,650s or USD 1,660s."
The dollar remained on the defensive as Washington showed no signs of progress in debt agreement, making dollar-priced gold more appealing to holders of other currencies.
Spot gold was little changed at USD 1,613.69 an ounce by 0641 GMT, off an all-time high of USD 1,628 set on Wednesday.
US gold barely moved at USD 1,614.30.
Adding to the safe-haven demand, Standard & Poor's cut Greece's sovereign credit rating further into junk territory, saying the European Union's proposed debt restructuring would put the country into "selective default".
Technical analysis suggested that a bullish goal at USD 1,644 has been abandoned and gold could head down towards USD 1,593, said Reuters analyst Wang Tao.
If Washington reaches a deal on raising the USD 14.3 trillion debt ceiling, gold could face a pullback with the return of risk appetite.
"Gold is very ignitable at this point -- throw it a spark and it shoots up," said Hou Xinqiang, an analyst at Jinrui Futures in China.
"When we see a result, prices will correct and present a good chance to get into the market."
In Asia's physical gold market, record highs have triggered moderate selling and buying remained muted during the seasonal lull.
Spot silver was flat at USD 40.21, after reaching USD 41.42 on Wednesday, its highest since early May, when prices tumbled from a record of USD 49.51 set on April 28.
