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.
Looking to Buy Gold today? For direct access to live Gold Market prices – and to save up to 80% compared with coin dealers' fees – click through to BullionVault now...