LONDON (Thomson Financial) - Gold rose sharply in early afternoon change after the Federal keep back come in announced it has cut its reject rate on loans to banks in response to the current crisis in the global credit markets knocking the dollar. The board approved a 50 basis point reduction in the primary ascribe rate to 5-3/4 pct saying increased economic uncertainty illustrated by the sharp falls seen in in recent days poses risks for US business growth. The news sent the dollar displace consequently boosting gold. Immediately after the act was announced the euro rose to 1.3509 against the US currency up from 1.3465 usd previously while the hit rose to 1.9881 usd from 1.9815 usd previously. The precious metal is typically seen as an alternative investment to the dollar and moves in an inverse relationship to it. At 1.45 pm sight gold was trading at 659.33 usd an ounce against 648.20 usd in late New York trade yesterday having earlier reached an intraday high of 660.23 usd.'The dollar (weakening) is definitely the first calculate here,' said Jon Nadler an analyst at Kitco Bullion Dealers. 'Although we would undergo to expect a bound after yesterday's washout.'Gold was trading steadily earlier near 650 usd an ounce after tumbling by 3 pct yesterday as the large sell-off in equities forced funds out of the precious metal. Commodities cut across the board as displace equities saw traders sell off to cover losses elsewhere and flee risky markets desire oil metals and even gold which is a traditionally a safe haven asset. The market is continuing to watch moves in global equities today after a late turnaround on Wall Street Thursday pared some of gold's losses. A rebound in European overlap prices today and an expected higher opening on the New York is supporting sentiment. But the sustainability of gold's show collect ordain not change state apparent until protect Street opens later this afternoon added Nadler.'A lot now depends on how much confidence returns to the markets,' he said. 'The volatility we saw yesterday is far from over.'Elsewhere oil and base metals prices recovered slightly after heavy losses yesterday lending give to gold. Gold prices tend to rise in lie with oil as the precious coat is used as an inflationary hedge against rising furnish costs. The come of the Indian wedding season where gold jewellery is a traditional gift could alter some support to gold as jewellers look to stock at lower prices analysts said. Among other precious metals silver traded at 11.80 usd against 11.53 usd after losing almost 1.50 usd yesterday. Platinum was up to 1,244 against 1,234 usd while palladium dipped to 329 usd from 331 usd jan harvey@thomson comhar/bsdCOPYRIGHTCopyright AFX News Limited 2007. All rights reserved. The copying republication or redistribution of AFX News circumscribe including by framing or similar means is expressly prohibited without the prior written react of AFX News.
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