Forexpros – Last week saw gold prices post their third consecutive weekly gain, re-approaching the all-time high on Friday as mounting worries over a potential U.S. sovereign debt default boosted the safe haven appeal of the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery settled at USD1,602.65 a troy ounce by close of trade on Friday, gaining 0.52% over the week.
It earlier rose to USD1,606.85 a troy ounce, the highest price since July 19, when gold prices rose to a record high of USD1,610.70 a troy ounce.
The U.S. Senate rejected a USD3 trillion debt-cutting plan on Friday, adding to fears over a potential default ahead of the August 2 deadline to raise the country’s USD14.3 trillion debt ceiling.
President Barack Obama said that he was “deeply disappointed” by the lack of progress towards reaching an agreement, while Senate Democratic leader Harry Reid said Republican “intransigence” was “pushing us to the brink of a default on the full faith and credit of the United States.”
Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke, and New York Fed President William Dudley met Friday to discuss the implications for the U.S. economy if Congress failed to raise the debt ceiling.
Gold is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk.
On Thursday, prices came under pressure after European Union leaders agreed on a second bailout package for Greece worth EUR159 billion, with bondholders agreeing to contribute to the bailout.
Bit investors remained wary over whether the new aid deal for Greece was enough to stop the debt crisis from spreading to Italy and Spain.
Ratings agency Fitch said Friday that Greece faced a “restricted default” under the terms of the new bailout plan.
Meanwhile, global financial service provider HSBC said that, “European leaders may have acted to resolve the short-term sovereign debt problems, but the plan’s execution will be carefully monitored.”
The lender said in a report on Friday that the region’s debt woes “will remain a primary catalyst for further gains in gold prices over the medium term.”
Elsewhere on the Comex, silver for September delivery traded at USD40.09 a troy ounce by close of trade on Friday, jumping 1.9% over the week, as investors sought a cheaper alternative to gold.
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