Gold News

Gold: Breaking News – Fed Makes 0.75% Emergency Rate Cut; Stocks Bounce, Gold Rockets

Gold Prices jumped at the US opening on Tuesday as the Federal Reserve stepped in to prevent a rout in Wall Street stocks with a 0.75% cut to Dollar interest rates.

The Gold Market leapt to $875.50 per ounce, while Dow futures – which had pointed to a 600-point loss – moved rapidly higher. The FTSE 100 in London spiked to stand 1.7% higher for the session.

The UK's top 100 shares had begun the day almost 4% down.

Not scheduled to meet until Jan. 30th, the Fed cited "a weakening of the economic outlook and increasing downside risks to growth," adding that "the Committee expects inflation to moderate in coming quarters."

But the emergency action to try and stem stock-market losses wasn't unanimous. Bill Poole, head of the St.Louis Fed, "did not believe that current conditions justified policy action before the regularly scheduled meeting next week," the Fed's press release admitted.

The Fed's move had been rumored in European dealing rooms this morning after the Euro fell to a one-month low on the currency markets beneath $1.4370.

Hong Kong stocks dropped 8.7% of their value to stand fully one-fifth lower since New Year's Day. The India Sensex sank 10% at the opening in Mumbai – and in New York, the day had looked equally torrid before the Fed's move.

Bank of America said its fourth-quarter earnings fell 95% thanks to mounting losses in the credit markets. Wachovia announced a 98% drop in its Q4 earnings, and set aside an additional $1.5 billion to cover bad loans.

UAL Corp. – parent of United Airlines – reported a $53 million loss, and DuPont – the chemicals company – said its profits fell by $326 million, some 37%, compared with the last three months of 2006.

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Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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