Gold surged to an all-time high as investors sought to protect their wealth against the possibility of a U.S. default that may come as soon as next week amid a standoff over the country’s $14.3 trillion debt limit. Silver rose to the highest since May. U.S. politicians remain deadlocked after a House vote on Speaker John Boehner’s two-step plan to raise the debt ceiling and pare the deficit was postponed from today. President Barack Obama has threatened to veto the measure, sending the dollar to a record low against the Swiss franc yesterday, while pushing the cost of insuring U.S. debt to a 17-month high. “Virtually everybody expects the debt-ceiling issue in the U.S. to be resolved,” said Eugen Weinberg, head of commodity research at Commerzbank AG. “On the other hand, the huge debt burden is not going to disappear following the agreement, and if the agreement is not reached, it would be a massive blow to the market.” Gold for immediate delivery rose 0.2 percent to $1,622.15 an ounce by 11:19 a.m. in London after touching an all-time high of $1,625.70. The December-delivery contract gained 0.5 percent to $1,626.80 on the Comex in New York after reaching a record $1,628.10. “Precautionary investment demand is supporting gold and silver,” Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland, said by telephone, adding that gold would be trading below $1,600 without that support. “This precautionary demand is currency substitution.” ‘Dangerous Game’ Obama said July 25 the lawmakers’ impasse was a “dangerous game” that risked causing a “deep economic crisis.” Moody’s Investors Service, Standard & Poor’s and Fitch Ratings have said they will cut the U.S.’s top-level ranking should a failure to raise the limit lead to a default. (For a related story to the U.S. debt talks, click here. To read a story on the performance today of currency markets, click here. For a page of stories on the U.S. debt debate, click here.) “Gold, along with a few select currencies, is increasingly the go-to asset as investors seek it out for its safe-haven properties,” James Steel, an analyst at HSBC Securities USA Inc., wrote in a note. “The weakness in the U.S. dollar, the result of the debt impasse, is reinforcing the gold rally.” ETP Holdings Holdings of bullion in exchange-traded products rose 0.3 percent to a record 2,128.229 metric tons yesterday, data compiled by Bloomberg show. Silver holdings by ETPs rose 0.6 percent to 14,027.83 tons yesterday, the highest since May, as holdings in iShares Silver Trust, the biggest fund, advanced by 24.25 tons. Labor disputes in South Africa, the world’s fifth-largest gold producer, may threaten already-limited mine supply and “provide some upside,” according to Australia and New Zealand Banking Group Ltd. analysts including Mark Pervan. Miners at AngloGold Ashanti Ltd. (ANG), Harmony Gold Mining Ltd. and Gold Fields Ltd. (GFI) will join a July 28 strike, protesting together with workers in the country’s petroleum, coal and diamond industries after rejecting pay proposals. South Africa’s gold mines employ about 134,000 people, according to the country’s Chamber of Mines. Gold gained to $1,621 an ounce in the morning “fixing,” used by some mining companies to sell output, from $1,612.75 at yesterday’s afternoon fixing. Spot silver traded little-changed at $40.8875 an ounce after reaching $41.22, the highest price since May 4. Cash platinum was unchanged at 1,808 an ounce after reaching $1,817.50, the highest price since June 13. Palladium advanced 0.2 percent to $837.50 an ounce after reaching $844.50, the highest price since February. Possible Strikes “Robust Chinese demand together with the fears of possible strikes in platinum mines in South Africa are providing support,” Commerzbank’s Weinberg said. Palladium will rise to $900 and platinum will reach $1,986 by the end of this year, Janet Kong, managing director at the research department of China International Capital Corp., told a conference today. “We are especially bullish on palladium because it is cheaper than platinum and will attract more demand as the” auto industry uses it to replace platinum, Kong said. To contact the reporters on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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