* Gold investors take a breather after record high
* Fresh news awaited on U.S. debt talks
* Thousands of South African gold miners strike
By Jan Harvey
LONDON, July 28 (Reuters) - Gold prices rose towards $1,620
an ounce on Thursday as a deadline to lift the U.S. debt ceiling
approached, stoking concerns of a pontential default by the
world's biggest economy, and as worries over euro zone debt
simmered.
Gains in the precious metal were relatively muted, however,
as investors took a breather after pushing gold prices to record
highs in two of this week's three previous sessions.
Spot gold was up 0.3 percent at $1,617.19 an ounce at
0942 GMT. It hit a record $1,628 an ounce on Wednesday, before
correcting sharply later in the day.
"There are still enough uncertainties out there for the
market to focus on gold, the Swiss franc and the Japanese yen
for security," said Ole Hansen, senior manager at Saxo Bank.
"Downside dangers are obviously a solution to the debt
ceiling discussions, which could trigger a correction given the
amount of "new" money that has been put to work in gold over the
last few weeks."
A bill to cut the U.S. deficit faces a nail-bitingly close
vote in Congress on Thursday as the top Republican lawmaker,
House of Representatives Speaker John Boehner, sought to quell
an internal revolt and push his plan forward.
An agreement to cut the deficit is needed before lawmakers
will agree to raise the U.S. debt ceiling. If it does not do so,
the world's largest economy will run out of money to pay its
bills in less than a week.
The dollar fell 0.1 percent against a basket of six major
currencies as Washington showed no signs of progress on
the agreement, while the euro also eased due to renewed fears of
contagion in Europe.
Bunds extended recent gains, with investors still in a risk
averse mood due to rising chances of a U.S. debt default and
increasing doubts that the euro zone debt crisis can be
contained.
"As we draw closer to the Treasury's Aug. 2 deadline for
raising the debt ceiling, there's a rising likelihood of a
rushed, short-term fix that essentially kicks the problem
further into the future," said UBS in a note.
"This is likely to prompt the market to price in a higher
risk of a credit ratings downgrade. The spread between 10-year
German bunds and U.S. 10-year (Treasuries) widened the most in
over five months yesterday."
U.S. gold futures for August delivery were up $2.30
an ounce at $1,617.40.
SOUTH AFRICAN GOLD MINERS STRIKE
On the supply side of the market, tens of thousands of South
African gold miners will stop work on Thursday, adding to a wave
of strikes and potentially costing the gold mining sector $25
million a day in lost output.
The impact of supply outages -- particularly short-term ones
-- on gold is usually fairly soft, given the availability of
above-ground stocks of the metal relative to other commodities.
However, the the strike could give more of a lift to platinum
prices if it spreads to that sector.
Markets will be closely watching the outcome of talks
between the unions and Anglo American Platinum , the
world's number one producer of the precious metal.
"(Labour) strike notices have been issued by South Africa's
National Union of Mineworker, and about 100,000 gold miners are
expected to join a coal strike this weekend in pursuit of higher
wages, according to the NUM," said HSBC in a note.
"While we do not expect such action to move the price of
gold, the PGMs are susceptible to further gains if a coal strike
should threaten power supplies to the mines."
Around four in every five ounces of platinum is sourced in
South Africa, so supply disruptions in the republic have a
significant effect on metals prices. South African supply
outages were a major factor driving platinum to a record $2,290
an ounce in early 2008.
Spot platinum was up 0.2 percent at $1,787.49, while
spot palladium was up 0.6 percent at $827.68. Silver
was steady at $40.20 an ounce.
