SINGAPORE (Reuters) - Spot gold hit an all-time high on Wednesday, for the sixth time in two weeks, as worries grew whether the United States could avert a debt default while its two key political parties were still locked in stalemated talks to raise its debt ceiling.
Spot gold rose as high as $1,625.24, before easing to $1,624.19 by 0709 GMT. It was up in 16 of this month's 19 trading sessions so far.
U.S. gold also hit an all-time high at $1,625.8.
The U.S. House of Representatives decided to postpone a vote on a plan to raise the debt ceiling until Thursday at the earliest, narrowing the chances for a deal to avert a debt default.
"The same arguments about potential government bond fallout are still being made," said a Singapore-based trader, "but people are on the sidelines ahead of the August deadline waiting to see whether or not the U.S. is going to avoid a technical default."
Investors have become increasingly cautious as great volatility is seen ahead of the August 2 deadline however, he added.
Turmoil in the currency market also helped gold attract some interest. The dollar sank to a three-month low against a basket of major currencies.
"It's ambiguous what currencies are the so-called haven in the middle of all the problems in the West," the trader said.
A small majority of economists polled by Reuters said the United States would lose its top-notch AAA credit rating from at least one major rating agency.
Dealers reported muted reaction on Asia's physical market to gold's rally, as buyers and sellers alike cautiously watch the outcome of the U.S. debt talks.
"There has been some selling and very small volume of buying, and people wait to see if the U.S. will default," said Ronald Leung, physical dealer at Lee Cheong Gold Dealers in Hong Kong, adding that premiums for gold bars have fallen a little from last week to 50 cents to $1.1 per ounce over spot prices.
Platinum group metals scored multi-month highs, tracking strength in gold. Spot platinum hit $1,812.5, its highest since June 13. It eased to $1,808.45, up 0.4 percent.
Spot palladium reached a five-month high of $842 an ounce, and was trading at $839.97.
"As gold is at such lofty levels, we might see some substitute effect (in PGM). There is very strong potential that platinum group metals continue to move north," said the Singapore-based trader.
Spot palladium had risen 11.5 percent so far this month, the second-best performer after silver, which had gained nearly 19 percent in July. Platinum lagged behind other precious metals with a 5-percent month-to-date rise.