-- Comex gold hits intraday record of $1,581.40 a troy ounce
-- Irish debt downgrade spurs demand for a safe haven
-- Gold traders watch weak dollar, Washington debt ceiling talks for more cues
By Tatyana Shumsky
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Gold leapt to a record high as a credit downgrade for Ireland and protracted debt-ceiling talks in the U.S. reinforce investor concerns about a sovereign debt crisis.
The most actively traded contract, for August delivery, touched a record $1,581.40 a troy ounce shortly after 9 a.m. EDT. The contract was recently up $17.00, or 1.1%, at $1,579.30 a troy ounce.
Thinly traded July-delivery gold had not changed hands as of 9:43 a.m. EDT.
Moody's Investors Service Inc. downgraded Irish government debt to junk status, stoking market fears over government debt. The one-notch downgrade, announced by the credit ratings agency late Tuesday, cited the likelihood Ireland will need a second bailout.
The downgrade has intensified concerns that Italy, the third-largest economy in the euro zone, will also need financial aid.
Government debt problems have dominated investor attention in recent months as a string of euro-zone members, including Greece and Portugal, sought bailouts to cope with their outsized debt burdens. Market watchers have compared a euro-zone government debt default to the fall of Lehman Brothers, which sparked the 2008 financial crisis.
"The market has been climbing a wall of fear, these are issues that have been driving gold higher for a couple of years," said Bill O'Neill, principal with Logic Advisors.
Gold, widely considered a refuge from uncertainty, has risen to record levels as investors hunt for ways to guard their wealth. SPDR Gold Trust (GLD), the largest exchange-traded physical-gold fund, reported an inflow of 20 metric tons of gold at end of business Tuesday.
Meanwhile, physical gold held across the 25 largest exchange-traded funds has hit 2,139 metric tons the largest level since the start of the year, according to Barclays Capital.
Gold futures were also lifted higher by a weaker dollar, which retreated against the euro despite Ireland's troubles. The single European currency was recently at $1.4071, up from $1.3975 late Tuesday in New York.
Gold futures are denominated in dollars and appear cheaper to investors using foreign currencies like the euro when the greenback weakens.
Traders are also keeping a close eye on Washington, where progress to raise the debt ceiling has been painfully slow. The U.S. government faces an Aug. 2 deadline, after which the Treasury will fall short of money to pay existing debts.
-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; email@example.com
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