Gold surged to a new all time high of $1637 per ounce following the unresolved issue of US debt ceiling and the comeback of European debt struggles. Gold also surged on weaker-than-expected US growth data, which fortified investor concerns about the economy and pressured the dollar. The nation’s gross domestic product grew at just 1.3% in the second quarter this year while the first quarter growth rate was slashed to a miserable 0.4%. Moody’s put Spain’s Aa2 credit rating on review, while the borrowing costs for the PIIGS nations continued to be elevated.

The yellow metal faced some customary profit selling around $1600 mark but strong buying on dips made it overcome the barrier quite comfortably in the end. The metal could gain further in coming days as even if the US debt ceiling deadlock is solved, as the longer term finances of the world’s largest economy seem to be headed for a chaotic run. The head of the International Monetary Fund (IMF) has stated that the US dollar may decline in value as financial markets lose confidence that the US Government will pay its bills, if Congressional lawmakers fail to reach an agreement on the debt ceiling. On the MCX, the recent rally of the Rupee to 3-year highs took off the sheen from the domestic metal futures. In a surprise move, the Reserve Bank of India hiked its main policy rates by 50 basis points today in its first quarter review of its monetary policy.

Silver rallied in unison to Gold as safe haven buying pulled the metal from its lows and a weak US dollar as well as a firm undertone in industrial metal copper supported the sentiments. Demand for major silver coins has soared in the US, according to the latest round of US Mint sales stats, supported by the Mint’s removal of their household limits. Silver futures for September tested high of $40 per ounce while the MCX Silver futures faced a resistance around Rs. 60000 on a persistent basis on the strength in the Indian rupee.