US interest rate cuts 'provide ripe conditions for gold prices'

The US Federal Reserve has announced that it will cut interest rates still further in a bid to assist the ailing economy, according to Reuters.

This could be good news for investors in gold as increased uncertainty in the financial sector encourages more people to place their assets into gold bullion.

Interest rates have already fallen 2.25 per cent since September 2007 and it is expected that they could be cut by as much as another percentage point, reports Reuters.

Editor-in-chief of Moneyweb Lawrence Williams commented on the events and their implications for gold futures on the company's website.

"Conditions are ripe for an ongoing increase in the gold price, both as a recognition of the declining dollar and a protection against loss of value in more traditional investment sectors," he said.

The Federal Reserve has offered hundreds of billions of dollars in auctions and credit to banks in the last few days in an attempt to assist the distressed credit market, reports Reuters.
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