Gold Sinks in Morning Trading, Day After Fed Rate Reduction

by on May 1, 2008 · 1 comment

Bullion update ...Gold briefly climbed up by almost 2 percent after the Fed’s expected announcement yesterday of a quarter-point drop in its key interest rate. The rise was short lived, however.

The US dollar pulled back and gained strength Thursday morning. And moving in the opposite direction was gold, reaching for a four-month low with a New York spot price of $854.40 an ounce at 9:53 a.m. (ET).

Many expected the Fed to signal a pause in further rate reductions. That signal was small, if anything, but enough to result in an initial weakening of the dollar and spurring of gold upward. In the end, the dollar firmed against major currencies and gold took its falling cue.


“The return of dollar strength this morning has led to a swift reversal in direction with gold dropping back to $864, and given the pace of decline, suggests gold will remain at risk to further corrections in the coming sessions,” said James Moore, an analyst at


In an early note Thursday, John Nadler, senior analyst at Kitco Bullion Dealers, suggests the possibility that gold could inch lower.


"The potential for buyers to be able to pick some gold up at lower levels now becomes more likely once again, as the alternative rise turned out not to have real momentum behind it. Thus, $845 and (possibly) $800 loom (or beckon, if you are a would-be buyer) on the near-term horizon."


Also on New York trading, spot silver lost 65 cents at $16.19 an ounce and platinum fell $52.00 to $1,881 an ounce.

For the latest spot prices, visit the CoinNews page, Live Silver, Gold and Platinum Spots.

{ 1 comment… read it below or add one }

Koichi Ito May 2, 2008 at 3:06 am

Any drop in price of gold is bargain, because will rise again in future. All precious metal that include gold has costant value to other commodities. Currencies does not.

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