Gold hits record high amid debt ceiling 'mud slinging'

July 29, 2011: 2:51 PM ET
chart_ws_commodity_energy_oil_201172913588.top.png

Click chart for more commodities action.

NEW YORK (CNNMoney) -- With only days to go before the debt ceiling deadline and no concrete resolution in sight, commodities are going haywire.

As the debt deal impasse continued and a disappointing report showed that the economy grew at a slower-than-expected pace in the second quarter, oil prices slumped nearly 2%, while gold surged to a record high.

"Commodities are moving with the debt ceiling headlines," said Dan Flynn, energy trader at PFG Best. "There's still a lot of mud-slinging in Washington, and nobody knows what they're going to do."

Oil traders were also keeping a close eye on Tropical Storm Don, which was expected to land in Texas Friday afternoon.

"It's not supposed to be a devastating storm but it's probably going to cause disruptions on some oil platforms and cause a slowdown of work on certain refineries or offshore rigs," said Flynn.

Meanwhile, gold was the safe haven of choice -- with prices jumping nearly 1% to close at a record high of $1,628.30 an ounce.

While some gold investors worry that the country could still default, many are also worried that even if the debt ceiling is raised, any increased spending will put the economy in even worse shape.

And the government may begin printing more U.S. dollars, which would raise the prices of commodities across the board, said Flynn.

Raise the debt ceiling. For my mom's sake

He added that the commodities markets could see even more volatile moves next week

"The market has been pricing in if the debt talks have been taking a left hand turn or a right hand turn, and now that we're coming to the end of the week, Monday's going to be an interesting day," said Flynn.

It all depends on whether a deal is actually reached and if so, what it entails.

"It's a Catch-22," said Flynn. "The government has to do something before its self-imposed deadline, and traders have been sitting back and waiting, saying, 'okay, we're gonna have a deal -- but what exactly is that deal going to be?'" To top of page

Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.