December gold futures traded at a record $1,633 on Friday morning before pulling back to the $1,625 level by early afternoon lifted by 11th hour political wrangling about the US debt plan, news that Great Recession in that country was deeper than previously thought and the Euro debt crisis spreading to Spain.
Silver tracked gold with September contracts adding 48 cents, or 1.2%, to trade at $40.28 an ounce early on before slipping back to below $40 by early afternoon. The S&P 500 was poised to drop for a third straight month, the longest slump since 2008.
Reuters reports bullion hit its third record in five days and is set to rise around 9 percent for July and quoted one investment strategist as saying: "The weak economic data suggests that you may see some form of stimulus, certainly highly accommodative monetary policies, and that will continue to put a bid on gold prices."
The Guardian quotes an analyst on the Euro debt crisis as saying: "With the storm clouds which had gathered over Greece abating, if not disappearing, Moody's has now turned its attention to Spain. And unsurprisingly, it doesn't like what it sees. Spain's banking sector remains in turmoil, unemployment is sky high, and its debt is out of control."