The price of Gold Bullion rose above $1545 per ounce Tuesday morning London time – just over 2% shy of last month's record high – as stocks and commodities also rose. 

US Treasury bonds fell meantime as US Senators continue negotiations over the federal debt ceiling.

At Tuesday morning's London Fix, the Pound Sterling price of Gold Bullion set a new record at £953.94 per ounce.

"We have seen exceptionally strong physical gold demand so far this year," says Walter de Wet, commodities strategist at Standard Bank in London.

"Much of this support seems to be coming from the physical gold market, especially Asia [which has] been Buying Gold on dips...this trend seems entrenched."

US sovereign debt will be put on "rating watch negative" if Congress does not agree to raise the  $14.3 trillion federal debt ceiling by August 2, Andrew Colquhoun, head of Asia-Pacific sovereign ratings at ratings agency Fitch warned Tuesday. 

Not raising the debt ceiling would mean "lights out" for the US economy, Treasury secretary Tim Geithner warned earlier this month, since the US could not guarantee to meet its obligations on existing debt.

"Progress is being made" in talks due to continue up to the end of this week, Democratic senator Dick Durbin told NBC on Sunday.

"It will mean higher interest rates if we don't [raise the debt ceiling]...we shouldn't wait until high noon."

Republicans want to see entitlement spending curbed and trillions of Dollars in spending cuts.

"I don't think many people on my side of the aisle are going to have an appetite for increasing the debt ceiling" said Republican senator John Kyl in a speech to the Senate.

The US would "probably end up with a very short-term proposal over a few months" if the deadlock isn't broken, reckons Senate minority leader Mitch McConnell, a Republican. 

"[Then] we'll be back having the same discussion in the fall."

The US Dollar continued to fall against the Euro Tuesday morning, breaching the €0.70 barrier. The Dollar is down nearly 7% against Europe's single currency since the start of the year.

"The problems of the US far exceed Europe's despite all the focus on Greece and the peripheral economies," says Grant Turley, senior currency strategist at Australia & New Zealand Bank.

"The Fed doesn't look like it's going to be in a position to raise rates well into 2012, and that will keep the US Dollar under pressure."

The Federal Open Market Committee meets Tuesday and Wednesday to discuss policy its last meeting before the Fed's current $600 billion asset purchase program – known as quantitative easing – ends on June 30.

"We expect gold and silver to remain choppy and range bound" ahead of Wednesday's rate decision, says Swiss precious metals group MKS. 

The Fed is likely to adopt "an uncomfortable policy holding pattern for the balance of the year," says a note from Credit Suisse, which expects “exceptionally low levels for the federal funds rate for an extended period."

The federal funds rate has been set below 0.25% since December 2008.

Here in Europe, the International Monetary Fund has called on Eurozone members to underwrite any new loans to Greece in order to guarantee its solvency – without which the IMF may withhold its portion of a €12 billion loan payment due next month.

"That needs to be done before we can move forward," John Lipsky, acting managing director of the IMF, told reporters in Luxembourg on Monday following a meeting of Eurozone finance ministers.

Over in Vietnam, the central bank's latest draft decree will allow for private ownership of Gold Bullion – but individuals will only be permitted to buy and sell gold to and from banks or licensed traders. 

Gold Bullion will not be permitted as a means of payment – relatively common in Vietnam when buying large purchases such as houses.

The decree is the latest from the State Bank of Vietnam aimed at controlling the gold market.

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