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Singapore - Spot gold touched a record high on Monday, on
track for its longest winning run in at least four decades as the metal reflects persistent worries about the eurozone debt crisis and the growing threat of a
US government default.
Spot gold rose to an all-time peak of $1 598.41 and US gold
hit a record high of $1 599.20.
The appetite for bullion as a safe storage of value
increased as Republicans and Democrats sought to craft a plan that could avert
an unprecedented government default, which might wreak havoc in global markets
and send the world's top economy back to recession.
Adding to worries about the economic growth, US consumer
confidence hit a near two-and-a-half-year low in early July and manufacturing
output stalled in June.
"The political uncertainties in the United States and
Europe will be an ongoing theme and safe haven demand will continue," said
Natalie Robertson, a commodities analyst at ANZ.
Robertson expected gold to reach $1 650 in the short term on
macro concerns and chart strength, but added that volatility may increase as
the deadline for the US debt ceiling talks on August 2 draws close.
Spot gold edged up 0.2%
to $1 596.20 an ounce in early morning trade, on course for an 11th
straight session of gains - its longest winning stretch in at least four
decades.
US gold gained 0.4% to $1 596.70.
Results of stress tests of 90 banks across the European
Union were better than expected, but failed to impress investors who continue
to worry about the contagion possibility of the region's debt crisis.
"This move in gold still has momentum, as Europe is
burning to the ground," said a US-based trader.
Technical analysis also pointed to a bullish picture. Spot
gold has resumed its medium-term uptrend and would rise towards $1 613, said
Reuters market analyst Wang Tao.
Indicating increased appetite in bullion, speculators
sharply raised their bullish bets in US gold futures and options last week as
prices rallied, data from the US Commodity Futures Trading Commission showed.
Holdings at the SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, rose nearly 1% to 1 236.013 tonnes, the highest
since late January.
"Gold prices have hit fresh highs across several
currencies on macro unease, the dollar weakening and the escalation of European
sovereign debt uncertainty creating a favourable backdrop," said Barclays
Capital in a research note.
"We expect prices to test new highs despite the
seasonal weakness in demand."
Spot silver hit $39.95, its highest since May 4. It was
trading at $39.84, up 1.5%, leading the year-to-date performance in the
precious metals complex with a 29% gain.
US silver gained 2% to $39.87.
The gold-silver ratio, used to measure how many ounces of
silver can buy an ounce of gold, declined to 40.10, its lowest since the end of
May.