Gold News

Fed injects temporary reserves, rate cut expected

All eyes were on the Federal Reserve again, as news emerged of the addition of $7.5 billion in temporary reserves to the US banking system.

Injected by means of a three-day repurchase agreement, it is claimed that as much as $63.8 billion in bids were submitted for the operation.

The move has reignited debate about the probability of a Federal rate cut next week, with worrying economic data convincing many of the case for another cut to follow the recent 0.5 per cent slash.

Among factors concerning investors were fresh record lows tabled by the dollar against the euro and several other currencies, with the injection of temporary reserves adding to concerns of severe greenback depreciation.

Meanwhile oil prices continued to soar amid geopolitical tension in the Middle East, spelling trouble for many fuel-reliant industries but giving confidence to those looking to buy gold.

After the announcement of the temporary reserves operation, Federal funds continued to trade at a 4.81 per cent rate.

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