Gold declined from a record in London after President Barack Obama said congressional leaders agreed on a plan to prevent a default, curbing demand for the metal as a protection of wealth. Leaders of both parties in the U.S. House and Senate agreed to raise the nation’s debt ceiling by $2.1 trillion and cut the federal deficit by as much as $2.5 trillion over a decade, Obama said, speaking from the White House. Gold climbed to a record $1,632.80 an ounce on July 29 and holdings in exchange-traded products rose to an all-time high. Gold is “lower this morning in reaction to the U.S. debt deal news,” James Moore, an analyst at TheBullionDesk.com in London, said in a report. “There still remains some pessimism that the deal could fall at the last hurdle, but given the scale of gains posted in recent weeks the yellow metal is vulnerable to a deeper correction should the deal be given full approval.” Immediate-delivery gold slipped $11.57, or 0.7 percent, to $1,616.30 an ounce by 11:17 a.m. in London. Gold for December delivery was down 0.7 percent at $1,619 on the Comex in New York. It reached a record $1,637.50 on July 29. Bullion fell to $1,613.50 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,628.50 at the afternoon fixing on July 29. The House plans votes today and the Senate may follow suit to consider the agreement reached during weekend negotiations that capped a months-long struggle between Obama and Republicans over raising the $14.3 trillion debt ceiling. Debt Limit Increase Treasury Secretary Timothy F. Geithner has said the U.S. will run out of options to prevent a default by tomorrow if the debt limit isn’t increased. Standard & Poor’s, which has rated the U.S. AAA since 1941, said on July 14 that the chance of a downgrade is 50 percent in the next three months and it may cut the rating as soon as this month if there isn’t a “credible” plan to reduce the nation’s deficit. “Gold reached a record because U.S. politicians didn’t seem to be getting anywhere with their negotiations and now that they have an agreement, gold will be knocked back a little,” said Steven Zhu, operations manager at Yinjian Futures Co. “We all knew the U.S. politicians would reach a deal by Aug. 2. However, problems still exist within the economies of the U.S. and Europe and that will keep gold’s uptrend intact.” Bullion climbed to records priced in euros and pounds last month on concern the debt crisis triggered by Greece is spreading to bigger nations. Moody’s Investors Service said on July 29 that it’s reviewing Spain’s Aa2 credit rating and that a cut would probably be “limited to one notch.” ETP Holdings Gold is up 14 percent this year, heading for an 11th straight annual gain, the longest winning streak since at least 1920 in London. The MSCI All-Country World Index of equities gained 2.3 percent in 2011, the Standard & Poor’s GSCI Index of 24 commodities is up 10 percent and Treasuries returned 4.2 percent, according to a Bank of America Merrill Lynch index. Holdings of the metal in ETPs rose for a fifth day on July 29, climbing 1.8 metric tons to a record 2,152.2 tons, data compiled by Bloomberg show. Silver for immediate delivery slipped 0.9 percent to $39.51 an ounce. Palladium rose 1.5 percent to $844.13 an ounce. Platinum was 0.7 percent higher at $1,793.40 an ounce. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@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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