NEW YORK ( TheStreet ) -- Gold prices closed at a record high Friday after a lackluster reading on gross domestic product for the second quarter.

Gold for December delivery rose $15 at $1,631.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,637.50, an intraday record, and as low as $1,613 while the spot gold price was up $7.80, according to Kitco's gold index.

Silver prices for September settled up 31 cents to $40.10 an ounce. The U.S. dollar index was losing 0.40% at $73.82 while the euro was up 0.34% vs. the dollar.

The dollar was losing steam and gold prices were benefiting after news broke that the U.S. economy grew at a slower-than-expected pace of 1.3% in the second-quarter, according to the Department of Commerce's advance reading on gross domestic product. That compares with first-quarter growth of 0.4%, which was downwardly revised from initially reported expansion of 1.9%. Economists had been anticipating second-quarter growth of 1.7%, according to Briefing.com.

Gold was also taking its cue from Washington, which has been unable to even vote on a debt ceiling plan. House Speaker Boehner failed to garner the votes for his debt plan Thursday, but after reportedly adding a balanced budget amendment to his proposal, his plan will be put to a floor vote this evening. Senate Democrats are still prepared to strike it down, and Senator Reid is preparing a vote on his own plan tonight as well.

The lack of a huge spike in the gold price still signals that investors expect some kind of plan to raise the debt ceiling but that they want insurance just in case. The Treasury Department has signaled that the government would pay back bondholders first in the case of a default but missed payments on any bills would be considered a default and most likely trigger a downgrade of the U.S.'s triple A credit rating.

In case of a default, experts are saying that gold could spike to $1,800 an ounce almost overnight. If it is a catastrophic default, meaning that the U.S. can't pay any bills, Jeb Handwerger, editor of GoldStockTrades.com, said gold would see a parabolic move but that "a blow-off top could be somewhat bearish for long term precious metals investors."

A move that hard that fast means that gold might not be able to sustain those high prices, but Handwerger said the more likely option is that Washington will raise the debt ceiling but there will still be a debt downgrade. That scenario would lead to a slower rise in gold to that $1,800 mark, tempered by intermittent profit-taking.

Handwerger admitted that there is a possibility of a $250 selloff in the gold price if there is a default and a downgrade, but that prices would rebound, as the debt problems in the U.S. would be far from over. "The problems will be kicked down the road until the 2012 elections ... the long-term trend is intact and gold could move higher," he said.

Jeff Clark, Casey's senior precious metals analyst, said that gold could see a 5% correction if a debt plan is reached in Washington, which would bring prices down to $1,525 an ounce.

"The gold price could easily correct once a debt deal is reached," said Clark. "Many analysts are attributing the current run-up in the gold price to the debt ceiling talk impasse," so if a deal is reached, then a lot of the impetus for higher prices will disappear.

If there is no resolution "there would be quite a rush into gold," Clark said. He doesn't think default is an option but does think that gold could spike to $2,000 almost overnight if the U.S. does. "Long term, no doubt gold will have to move higher. ... The reason why people are buying gold outside of the U.S." has little to do with the debt crisis. Clark said gold will rise due to global inflation and weak currencies as people seek protection.

Although silver has been acting less like a safe-haven metal and more as an industrial metal sensitive to a global slowdown, Clark believes prices will still head higher. "Going back to $50 by the end of the year is in the bag," he said. Clark says silver could even hit $60 as a monetary metal because it is cheaper than gold.

Gold mining stocks were sinking Friday. Randgold Resources ( GOLD) was down only 0.46% to $90.82 while Kinross Gold ( KGC) is losing 2.27% at $16.35. Other gold stocks, Yamana Gold ( AUY) and Harmony Gold ( HMY), were trading lower at $12.98 and $13.57, respectively.


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-- Written by Alix Steel in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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