GOLD JUMPS BY MORE THAN $10 AS FED CUTS RATES BY 75 BASIS POINTS
Tue, Jan 22 2008, 14:00 GMT - FX Street.com
LONDON (Thomson Financial) - Gold jumped by more than $10 in the immediate aftermath of an emergency 75 basis point rate cut from the US Federal Reserve, as the central bank of the world's largest economy moved to try and stave of a recession which could spread around the world.
Gold jumped to an intraday high of $877.85 immediately after the announcement, having been trading around $863 before versus $865.10 at the close in New York yesterday.
Gold has been boosted by a weakening dollar in response to the cuts, as investors buy into the precious metal as an alternative to the most common form of currency reserves.
Broader financial fears, heightened now by what may be seen as a panic move from the Fed are also attracting safe haven flows into bullion.
Speaking earlier, Scotia Mocatta analyst Simon Weeks said, "It's very easy to get pushed into doing something by the market. I think it would probably do more harm (to market sentiment) than good."
Rumours had been circulating throughout the market all day that an emergency cut was being planned, but the majority of metals analysts had dismissed the claims as the usual chatter which always emerges when financial panic takes hold.
Global equities plunged yesterday's on fears of a US recession. US equities were tipped to open sharply lower today, having been spared much of yesterday's bloodletting with markets shut for the Martin Luther King public holiday. Following the Fed announcement predicted losses have been trimmed.
At 1.32 pm, spot gold was trading at $872.05 per ounce, having eases slightly from its earlier intraday high.
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