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Gold futures advance on U.S. outlook, debt downgrade fears

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Forexpros - Gold futures edged higher on Tuesday, hovering close to the record high amid fears the U.S. economic recovery was faltering, while worries about a downgrade of the U.S. sovereign debt rating underlined the safe haven appeal of the precious metal.

On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,626.55 a troy ounce during late Asian trade, gaining 0.3%.

It earlier rose as much as 0.4% to trade at a daily high of USD1,628.15 a troy ounce, hovering close to the record high of USD1,637.50 a troy ounce it hit on July 29.

A report on Monday showed that the U.S. Institute for Supply Management's Manufacturing Index grew at its slowest pace in two years in July, adding to concerns over the health of the world's largest economy.

Meanwhile, the U.S. House of Representatives passed a bill to raise the U.S. debt ceiling by at least USD2.1 trillion late Monday. The U.S. Senate was expected to vote in favor of the bill later in the day.

However, concerns that the deal to raise the U.S. debt ceiling would not be sufficient to prevent ratings agencies from cutting the U.S. sovereign debt rating continued to weigh.

Gold is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk.

Gold prices found further support after South Korea's central bank said earlier that it purchased approximately 25 tonnes of the precious metal between June and July to diversify its foreign reserves despite high prices.

It was the first purchase of gold by the Bank of Korea in more than a decade, taking its total gold holdings to 39.4 tonnes.

Elsewhere on the Comex, silver for September delivery gained 0.7% to trade at USD39.60 a troy ounce, while copper for September delivery shed 0.45% to trade at USD4.387 a pound.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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