Gold traded at new records on the New York Spot Market as the House fails to pass a debt ceiling bill and GDP numbers signal a stalled recovery. The GDP report, which revealed a tepid 1.3% growth rate in the second quarter, raises the possibility of further monetary easing, thus, prompting investors to buy the yellow metal as a hedge against a weaker dollar. “It was quite a bad release and it raises hopes that there will be more monetary easing in the form of quantitative easing and that’s positive for gold as an investment asset,” said Matthew Turner, precious metals analyst at Mitsubishi.

By Scott Carter, CEO, Goldline International May 28, 2011 As Congress continues to work through competing proposal to raise the debt ceiling, James Moore, research analyst at FastMarkets, tells The Street, he thinks many investors are sitting on the sidelines until a final resolution is reached. However, Moore cautioned that no Congressional plan contains sufficient [...]

Gold prices reached new record highs on the New York Spot Market before falling lower on profit taking. Gold’s new record was attributed to continuing concerns of a U.S. default and credit downgrade. Politicians from both parties remain divided on a plan to raise the debt ceiling with less than a week before the August 2 deadline. “If you have a default of U.S. government debt, there are consequences and it is better to remain in safe haven assets such as gold,” said Peter Fertig, a metals consultant at Quantitative Commodity Research. “If there isn’t a last minute compromise (in the U.S. debt talks) then the situation will get more and more critical. Gold is one of the alternatives to U.S. treasuries and therefore there is further upside potential.”

Gold prices are relatively flat during Tuesday afternoon trading in a mix of profit taking and safe haven asset purchases on a weaker dollar. A final deal to raise the debt ceiling remains out of reach as lawmakers continue to pursue separate proposals before the August 2 deadline. President Obama delivered a plea to Americans via primetime television Monday night, encouraging people to contact lawmakers and urge a compromise. “For the first time in history, our country’s triple-A credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet,” Mr. Obama said.

The Erste Group, one of Europe’s largest financial services providers, has just released a report with a 12-month gold price target of $2,000 per ounce, as well as a price trend phase ahead that leaves the price of gold at $2,300 per ounce or higher. In its report, the Erste Group explained that gold is experiencing a renaissance as an investment class amid times of chronic uncertainty.