The cut in interest rates for lending was lower than expected yesterday (March 18th), signalling concerns about inflation, reports Bloomberg.
Despite predictions that the cut could be as much as a whole percentage point, the US Federal Reserve only reduced rates by three-quarters of a percentage point, weakening the outlook for the US economy still further, but strengthening the market for investing in gold.
"In the longer-term the increasing threat of inflation will help to support [gold] prices and could drive it back towards its recent all-time high," said Investec Australia in a daily report, according to Reuters.
Gold prices continue to ride high as a safe haven compared to fluctuating currencies in the current difficult economic climate.
The rate cuts come as the Federal Reserve attempts to help the ailing US economy and restore faith in the financial system.
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