Gold strikes new record high on US default fears

Gold forged a record high above $1,625 per ounce here on Wednesday, as investors parked their cash in the precious metal in the face of heightened concerns over a potential US default. The price of gold struck $1,625.70 an ounce at about 0600 GMT on the London Bullion Market, beating the previous record of $1,624.07 that was hit on Monday. "The threat of default by the world largest economy has led gold to a fresh peak above $1,625 this morning," said FastMarkets analyst James Moore. "The metal looks set to extend towards $1,650 in the coming sessions as investors seek to diversify into more tangible assets as confidence in paper assets, even government-backed, dwindles." The United States remained on course on Wednesday for a potential debt default with grave consequences, with common ground still elusive on a deal that would let Washington borrow the cash it needs to pay its bills. The White House and its divided Republican foes clashed on Tuesday but failed to break an impasse that could see the world's richest nation default on its debt, with potentially ruinous global results. Investors are extremely worried about the risk of an August 2 deadline passing without a breakthrough. "Should a default occur, gold will be vulnerable to a sharp correction as investors cut their risk exposure and use gold to generate cash, but ... once the initial sell-off is complete there are likely to be further upside gains," added Moore. In recent weeks, gold has blazed a record-breaking trail as investors have also sought shelter from the intensifying eurozone debt crisis.