Gold prices follow each twist in debt-limit talks

Gold prices got whipsawed Wednesday as investors tried to determine whether a debt-limit deal would happen. If it doesn't, gold prices could soar.

Arnd Wiegmann/Reuters/File
File photo of an employee displaying a bar of one kilogram fine gold at a plant of gold refiner and bar manufacturer Argor-Heraeus SA in the southern Swiss town of Mendrisio Nov. 13, 2008. Gold prices gyrated July 27, 2011, as investors tried to determine whether a debt-limit deal would emerge in time from lawmakers in Washington.

NEW YORK – Gold prices were whipsawed Wednesday as traders try to make sense of the impasse in Washington over raising the country's borrowing limit.

Gold for August delivery went as high as $1,627.90 an ounce during morning trading. Later in the day,gold prices sank to settle down $1.70 at $1,615.10 an ounce.

If Congress can't reach a deal to raise the debt ceiling by Aug. 2, the United States could default on its debt. That would be sure to roil financial markets and send gold prices higher as investors seek relatively safe places to park their money.

Gold trading is highly volatile because investors are buying or selling based on every headline about the debt debate, said George Gero, vice president of RBC Global Futures in New York.

Crop prices were mixed. Corn for December delivery rose 4.75 cents to settle at $6.915 a bushel. September wheat rose 10.75 cents to settle at $7.0475 a bushel and November soybeans lost 8.25 cents to close at $13.805 a bushel.

September silver lost 13 cents to settle at $40.568 an ounce.

September copper fell 3.15 cents to settle at $4.4465 a pound, October platinum gained 80 cents to $1,808 an ounce and September palladium fell $2.90 to $833.20 an ounce.

Oil prices fell after the nation's oil and gasoline supplies rose last week with the release of millions of barrels from the Strategic Petroleum Reserve.

Commercial crude supplies increased as the U.S. released about 2.3 million barrels from the Strategic Petroleum Reserve. It's part of the 60-million barrel release announced by the International Energy Agency last month to help cover potential shortfalls in global markets resulting from the absence of Libyan oil. The U.S. will eventually release 30 million barrels from the strategic reserve as part of that.

Benchmark crude for September delivery fell $2.19 to settle at $97.40 per barrel on the New York Mercantile Exchange.

In other Nymex contracts, heating oil fell 3.07 cents to settle at $3.0944 per gallon, gasoline fell 1.54 cents to $3.0831 per gallon and natural gas fell 1.3 cents to $4.318 per 1,000 cubic feet.

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