LONDON (Reuters) - Gold fell on Monday as investor concern about debt default in the United States, the world's largest economy, receded after President Barack Obama announced a last-minute deal to raise the country's borrowing limit.
Spot gold was bid at $1,614.73 a troy ounce, by 0941 GMT, down 0.7 percent from $1,626.59 an ounce late on Friday.
Earlier on Monday the precious metal fell more than one percent to a low of $1,607.69 an ounce, off a record high of $1,632.30 hit on Friday.
"It's risk-off at the moment. The fact that gold hit an all-time high on Friday and is off today reflects the mood that the risk (of a U.S. default) has diminished over the course of the weekend," said Ross Norman of Sharps Pixley.
Republican and Democratic lawmakers were expected to vote on Monday on the deal to raise the U.S. borrowing limit and cut about $2.4 trillion from the deficit over the next decade.
While the deal comes just in time for the August 2 deadline, uncertainty remains over whether it will be enough for country to maintain its top-notch credit rating, keeping gold's appeal as a hedge against risk intact.
"This (plan to raise the debt ceiling) is only one step and the U.S. will still have issues to face looking ahead so it's not an end to the gold bull," Norman said.
The dollar enjoyed a relief rally against the yen and Swiss franc also weighed on precious metals. A higher U.S. currency gold more expensive for holders of other currencies.
