Commodity NEWS 28 July 2011

Posted by Naresh Tomar on Thursday, July 28, 2011

Gold prices rose to record highs above $1,625 on Wednesday, with silver and palladium also rallying, as concerns over the prospect of a U.S. default prompted investors to buy precious metals as a haven from risk. Bitterly divided Republicans and Democrats are are scrambling to find common ground with less than a week before the government hits its borrowing limit, with chances of a quick resolution receding after a vote on a deficit plan by Republican Speaker John Boehner was pushed back to Thursday from Wednesday. Failure to lift the debt ceiling by August 2 could trigger a debt default, while a budget plan that flinches from hefty cuts in the deficit could result in a downgrade of the country's top-notch credit rating, analysts said. Spot gold hit a fresh record high of $1,628 an ounce and was up 0.3 percent at $1,623.36 by 1411 GMT. "There is not only uncertainty about a possible downgrade (for the U.S.) but a possible default if the debt ceiling is not increased. That is reflected in gold prices and people are positioning themselves for a worst-case scenario," said Georgette Boele, head of forex and commodities research at ABN Amro. Bullion has gained more than 8 percent in July and has hit six all-time highs in the past ten sessions, as U.S. lawmakers were locked in a standoff over duelling debt plans that offered little prospect for compromise. Source :- Reuters

Oil fell on Wednesday as partisan wrangling over the U.S. debt limit unnerved investors and sent them fleeing from assets perceived to be dependent on growth. Brent fell 33 cents to $117.95 a barrel by 1019 GMT, U.S. oil dropped 58 cents to $99.01, also pressured as an industry report showed crude stocks in the country rose unexpectedly. "The main factor is the debt situation (in the United States), there are fears about growth and the country's AAA rating is under threat," Michael Hewson, analyst at CMC Markets said. A Republican plan to cut the U.S. deficit faced delay and stiff opposition on Wednesday, piling anxiety onto investors and ordinary Americans hoping for a late compromise to avoid a crippling debt default. Source :- Reuters

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