Gold rose for the ninth day in a row Friday as government debt troubles continued on both sides of the Atlantic.
Gold for August delivery rose 80 cents to settle at $1,590.10 an ounce. The price was a record in dollar terms but below the peak reached in the early 1980s after accounting for inflation.
Gold has been rising steadily since July 1, as talk of a default by Greece, then Italy and most recently the U.S. increased. Greece managed to secure a second package of emergency loans but it's still not clear that the country will be able to avoid some form of default on its debt.
Italy edged further away from the brink of fiscal crisis by passing a cost-cutting package to get its budget in order. In Washington, a stalemate continued between Republican lawmakers and President Obama over raising the country's borrowing limit ahead of an Aug. 2 deadline.
Standard & Poor's warned late Thursday that the U.S. could lose its coveted triple-A credit rating unless the impasse is broken. Moody's issued a similar warning Wednesday. While many investors think it's unlikely, a default by the U.S. government on its debt would be catastrophic for financial markets.
U.S. government bonds are seen as the most stable asset in the world. If that confidence is undermined it would lead investors to seek safety in other investments such as gold and silver, hard assets which are seen as stable stores of value when there is turbulence in markets for currencies, bonds and stocks.
"There's been a lack of confidence in paper currencies with all the default talk in Europe and the U.S. It's a run to safety," said Edward Meir, senior commodities analyst at MF Global.
Gold has now risen for nine straight days and is up 7.3 percent since July 1. Silver also rose as investors looked for alternatives to holding U.S. dollars, euros and other currencies.
September silver rose 37.7 cents to settle at $39.071 an ounce. September copper rose 3.3 cents to settle at $4.413 a pound. October platinum fell $18.80 to $1,755.50 an ounce and September palladium fell 2.70 cents to settle at $780.65 an ounce.
Energy futures rose. Agricultural contracts were mixed.
Benchmark crude for August delivery rose $1.55 to settle at $97.24 a barrel on the New York Mercantile Exchange.
In other Nymex contracts, heating oil rose 3.31 cents to settle at $3.1180 per gallon, gasoline rose 0.45 cent to $3.1293 per gallon and natural gas jumped 16.2 cents to $4.520 per 1,000 cubic feet.
Wheat for September delivery fell 12.25 cents to settle at $6.9475 a bushel, December corn rose 6.5 cents to $6.85 a bushel and November soybeans rose 3 cents to $13.87 a bushel.