Gold price hits all-time high on US debt concerns

Gold is seen as a key haven purchase

US Economy

The price of gold has risen to a fresh all-time high, and the dollar has hit a four-month yen low, on concerns the US may default on its debt obligations.

The moves came after ratings agency Moody's said it may cut the debt rating of the US, warning there was a "rising possibility" it will default.

To avoid default, US politicians have to agree to raise the country's debt limit by 2 August.

Democrats and Republicans are currently in dispute over how best to do this.

'Shockwaves'

The spot price for gold rose to a record high of $1,589.56 an ounce in early Thursday trading, before easing to $1,584.51.

Gold is seen as the number one haven purchase in times of economic uncertainty, but analysts said its rise was also caused by the fall in the dollar, which makes the precious metal more affordable for holders of other currencies.

Against the Japanese currency the dollar fell to 78.45 yen at one point, its lowest level since March, before recovering to 79.61 yen.

The dollar also declined against the European single currency, down 0.6% to 0.7017 euros. The greenback also fell slightly against the pound, with sterling rising 0.2% to $1.6142.

Ben Bernanke said a default on the US debt would be ''a major crisis''

European share indexes were slightly lower in early trading, with Germany's Dax down 0.3%, and the UK's FTSE 100 losing 0.4%. Japan's Nikkei earlier lost 0.3%.

The Dow Jones index in the US closed up 0.4% on Wednesday, but this was before Moody's issued its warning.

Federal Reserve chairman Ben Bernanke has warned that a default by the US on its debt would cause a "major crisis".

Speaking before Congress on Wednesday, he said it "would send shockwaves through the entire financial system".

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As tough negotiations continue on Capitol Hill about raising the debt limit, President Barack Obama reportedly told a top Republican: "Enough is enough."

Talks between Republicans and Democrats are due to resume on Thursday.

"It's a very political environment right now and that's causing all this volatility," said Elke Schoeppl-Jost, chief investment officer at BEA Union Investment in Hong Kong.

Ms Schoeppl-Jost added that markets were concerned about the prospect of further stimulus spending in the US.

On Wednesday, Mr Bernanke said that this remained a possibility if the US economy worsened.

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Karzai brother service hit by Kandahar suicide bomber

Taliban Conflict

A suicide bomber has attacked a mosque in Kandahar during a memorial service for the assassinated half-brother of Afghan President Hamid Karzai, officials say.

Four people were killed, including the top cleric of the provincial council.

Ahmad Wali Karzai, a controversial but key figure in Nato's battle against the Taliban, was killed by his bodyguard.

President Karzai flew into Kandahar for his brother's funeral on Wednesday, but did not attend Thursday's service.

No group has so far admitted carrying out the mosque attack.

Chaos and panic

The explosion in the Red Mosque took place just after noon in the southern Afghan city.

"It was a suicide bombing. It was inside the mosque," a member of Kandahar's provincial council said.

"The service was about the end when it happened," the official added.

At the scene

Bilal SarwaryBBC News, Kandahar

I was in the mosque 30 minutes before the explosion took place.

Senior government officials, tribal elders and people from across the country were present at the memorial service for Ahmed Wali Karzai, and security was extremely tight.

When the bomb went off I was in the next street talking to other tribal elders.

According to eyewitnesses inside the mosque, the suicide attacker was prevented by security guards from entering.

The bomber blew himself up at one of gates of the mosque.

All the key roads have now been closed in the area.

An eyewitness told the BBC that "someone was trying to get inside the mosque" before the blast.

The suspected attacker was stopped at the mosque's entrance, and he then blew himself up.

Some reports suggest the bomber hid the explosives in his turban and was not searched by police.

Four people were killed and 13 injured after the blast, officials say.

The Afghan interior ministry said that among those killed was Hikmatullah Hikmat, the head of Kandahar's Ulema Council. The council is an influential body of clerics in charge of regulating religious issues in the province.

Four of President Karzai's brothers and the governor of Kandahar were in the mosque at the time.

The BBC's Bilal Sarwary in Kandahar reports that senior defence ministry officials were inside the mosque.

Elite police units have arrived in the area, our correspondent says, adding that there are currently scenes of chaos and panic in the area.

Questions are now being asked how the bomber managed to get to the mosque despite heavy security and police checkpoints, our correspondent says.

Appeal to Taliban

Ahmad Wali Karzai was shot twice by his family friend and long-time head of security, Sardar Mohammed, on Tuesday. The bodyguard was himself killed almost immediately.

Security was tight during Wednesday's funeral

The Taliban said that the attack was one of their top achievements in 10 years of war.

Ahmad Wali Karzai was seen by many as a key anti-Taliban figure, someone who stood up to them, using his private army and vast network to fight the insurgents, our correspondent says.

But he adds that his critics accused him of undermining the central government in Kabul.

On Wednesday, President Karzai wept at the graveside, and kissed his dead half-brother's face as senior politicians looked on.

The president then appealed to the militants to stop the bloodshed.

"My message for the Taliban is, my countryman, my brother, stop killing your own people," said Mr Karzai. "It's easy to kill and everyone can do it, but the real man is the one who can save people's lives."

Tuesday's killing was the latest and most high-profile in a series of assassinations of senior politicians and security commanders across the country.

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