Gold held steady below its record high on Tuesday as investors waited to see if President Barack Obama's appeal for lawmakers to break a deadlock in U.S. debt talks would succeed, while the euro zone debt crisis lent support.

Spot gold was little changed at $1,615.36 an ounce by 0634 GMT, slightly firmer after Obama warned that failure to reach agreement to avert default could cause a deep economic crisis and urged Republican and Democratic leaders to reach a compromise.

U.S. gold edged up 0.2 percent to $1,615.60.

"President Obama tried to add some confidence on the debt talks, but people still have doubt," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

An agreement on raising the U.S. debt ceiling beyond $14.3 trillion could take some heat off gold and trigger a correction to the $1,560 to $1,570 level, Fung said.

"But over the medium- to long-term, gold is still going to be on the upside as people will still be seeking a safe haven in gold with the problems around the world."

Spot gold hit a record high of $1,622.49 on Monday, and is likely to reach $1,644 in the short term on the chart, Reuters market analyst Wang Tao said.

The dollar lost more than 0.6 percent against a basket of currencies .DXY, and hit a record low against the Swiss franc and a four-month trough versus the yen, as investors were skeptical the U.S. talks would see a swift breakthrough.

Last week Standard & Poor's warned there was a 50-50 chance the U.S. AAA credit rating could be cut within three months.

"There is an increasing chance of downgrading, even if the debt ceiling is raised in the last minute," said Ong Yi Ling, an analyst at Phillip Futures in Singapore.

"Unless a long-term, more credible deficit reduction plan comes along, rating agencies will keep the U.S. on negative watch, which will benefit gold."

Underpinning sentiment in bullion, Moody's cut Greece's credit rating further into junk territory on Monday and said it was almost certain to slap a default tag on its debt as a result of a new EU rescue package.

India, the world's largest gold consumer, raised interest rates by a higher-than-expected 50 basis points on Tuesday to fight against stubbornly high inflation. Investors in major emerging economies, such as India and China, have shown growing interest in gold, seen as a good hedge against inflation.

South Africa's National Union of Mineworkers (NUM) said on Monday wage talks with the country's big gold miners had broken down and it would give them a 48-hour strike notice on Tuesday. South Africa was the world's fourth-largest gold producer in 2010, after China, Australia and the United States, Reuters data show.

Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 1,241.769 tonnes, while holdings in iShares Silver Trust, the world's biggest silver ETF, rose 42.44 tonnes to 9,891.61 tonnes -- their highest since June 10.

Spot silver gained half a percent to $40.51. It hit $41.05 in the previous session, its highest since May 4 when prices were tumbling from a record high of $49.51 set on April 28.

Silver could rise toward $42 to $43 if gold strengthens further, as investors look for a cheaper alternative to gold, Ong of Phillip Futures said.