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Metals - Gold steadies above
800 usd as investors await Fed rate verdict
Thomson
Financial
Tuesday December 11, 2007
Gold held onto yesterday's gains, steadying above
the 800 usd an ounce mark, as the dollar remained weak against
the euro amid widespread expectations the US Federal Reserve will
cut interest rates by 25 basis points this evening.
Elsewhere, gold was benefiting from a slightly stronger tone
in oil. The precious metal, seen as a hedge against oil-led inflation,
tends to benefit from high oil prices. It also tends to move in
the opposite direction to the dollar.
'The yellow metal has closely tracked the dollar so far this
morning, and is a theme likely to continue ahead of the FOMC meeting
later,' said TheBullionDesk.com analyst James Moore.
He added while a 25 basis point rate cut has been largely factored
in and could trigger some initial profit-taking, 'the longer-term
implications of falling US interest rates will draw investors
... towards better performing assets such as gold'.
(Article continues below)
At 10.19 am, spot gold was steady at 807.95 usd an ounce, against
807.40 usd in late New York trade yesterday.
The dollar steadied at lower levels against the euro, still under
pressure from expectations the Fed will cut rates again later
today, further eroding the dwindling value of the greenback.
Standard Bank analyst Walter de Wet said precious metals participants
will be keen to see if the Fed continues to put sluggish growth
ahead of inflation fears in its accompanying statement.
Should it do this, gold could benefit from expectations of further
rate cuts ahead.
Full
article here.
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