Gold dropped from a record as President Barack Obama said that US lawmakers reached a deal to increase the nation's debt limit and cut the federal deficit, averting a default tomorrow and eroding demand for haven assets.
Gold for immediate delivery lost as much as 1.3 per cent to $US1,607.45 an ounce, and traded at $US1,613.35 at 9:45 a.m. in Singapore. Spot gold, which reached an all-time high of $US1,632.80 on July 29, advanced 8.5 per cent last month on concern that sovereign-debt crises in the US and Europe may derail the global economic recovery.
"Gold reached a record because US 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.
Republicans and Democrats may vote today on the measure, which would raise the $US14.3 trillion debt ceiling through 2012, cut spending by about $US1 trillion and call for enactment of a law shaving a further $US1.5 trillion from long-term debt by 2021. Lawmakers should "do the right thing," Obama said from the White House late on July 31 in Washington.
"We all knew the US politicians would reach a deal by Aug. 2," Zhu said from Shanghai. "However, problems still exist within the economies of the US and Europe and that will keep gold's uptrend intact."
Gold for December delivery in New York shed as much as 1.4 per cent to $US1,608.20 after rallying to an all-time high of $US1,637.50 on July 29. Exchange-traded product holdings climbed for a fifth day on July 29, reaching a record 2,152.222 metric tons, Bloomberg data show.
Cash silver fell as much as 1.2 per cent to $US39.41 an ounce. Spot platinum gained 0.9 per cent to $US1,796.13 an ounce, while palladium rose 0.6 per cent to $US836 an ounce.