Gold News

Gold investment appealing after Fed rate cut

There could be a surge of gold buying over the coming weeks after the US Federal Reserve cut interest rates to one per cent last night (October 29th).

The cut is the second inside a month after the base rate was slashed to 1.5 per cent at the start of October as part of a coordinated move with five other major global central banks.

The authorities decided to take action as the spectre of recession looms ever larger, but the consequent negative impact on the dollar looks set to boost the appeal of investing in gold.

Darren Heathcote, head of trading at Investec Bank, has explained that gold prices could be about to embark on a sustained upward curve as the financial crisis drags on into next year.

He told Bloomberg: "I don't think we're out of the woods yet. There's still potential for problems in the financial system and a lot of systemic risk to be ironed out.''

The move certainly appears to indicate that the authorities still have major concerns over the ongoing effects of the credit crisis, despite concerted attempts to stem the tide.

The Bank of England is also under pressure to cut the base rate in the UK - which currently stands at 4.5 per cent - not least because the country's economy shrunk by 0.5 per cent in the latest quarter.

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