US default

Gold prices surged higher above $1,600 an ounce in Europe on Monday on fears over the euro zone debt crisis and the threat of a U.S. default.

Spot gold rose as high as $1,601.80 an ounce and was up 0.5 percent at $1,601.28 an ounce at 1044 GMT. Gold rose more than 3 percent for a second straight week to Friday, a feat it has not achieved since February 2009.

The US Congress and Obama administration are under pressure of the largest US banks who call for a deal to increase the country’s debt limit, saying that even a short default could be devastating for the financial markets and economy. Congress and the White House face the need to raise the US debt ceiling, which stands at $14,300 billion.

The deadline for America comes on May 16 and the Treasury department has said that in the absence of congressional action, the world’s largest economy could default by early July.