Spot gold rose to an all-time peak of US$1,598.41 and eased to US$1,595.91 an ounce by 0030 GMT, up 0.2 percent from previous close. It was on course for its 11th day of consecutive gains, the longest winning stretch in at least four decades.

US gold also hit a record high of US$1,599.20, before edging down to US$1,596.70.

Appetite for bullion as a safe storage of value increased, as investors feared that the stalemate in negotiations over US deficit plan could lead to a default, which might wreak havoc in the global market and send the world's top economy back to recession.

Adding to worries about the economic growth, US consumer confidence hit a near 2-1/2-year low in early July and manufacturing output stalled in June.

Holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose nearly 1 percent to 1,236.013 tonnes, highest since late January.

US silver gained nearly 2 percent to US$39.82.