A weakened U.S. dollar and an expected Federal Reserve rate cut on Wednesday helped shore up New York silver, gold and platinum futures. Each enjoyed gains of 11.5 percent, 2.0 percent and 1.0 percent, respectively.
After trading hours, the Fed cut its key interest rate to 1 percent, which was inline with most analysts’ expectations. The cut of 50 basis points is another attempt to combat the ongoing crisis in the credit markets.
Lower rates can help feed inflation and depreciate the U.S. dollar, which is normally bullish for gold in the long haul. However, the yellow metal maintained its recent unpredictable pattern and lost much of its earlier morning gains.
December oil surged $4.77, or 7.6 percent, to close to $67.50 a barrel.
December silver surged $1.02 to end at $9.81 an ounce.
January platinum gained $7.80 to settle at $816.60 an ounce.
Gold for December climbed $15.50 to close to $755 an ounce. The yellow metal has fallen in ten out of the past fourteen sessions since closing above $900 an ounce on October 8.
"The aggressive but totally unsurprising Fed rate cut came and went this afternoon. Stocks headed lower, gold lost $25 of its prior robust $30 gain for the day, and the dollar continued at pre-announcement levels," said senior analyst Jon Nadler at Kitco Bullion Dealers.
"Clear direction is still lacking in all of these markets, and conditions will pivot on a single news item, or someone’s mood souring for no apparent reason," added Nadler.
Gold typically follows oil’s direction and moves opposite to the U.S. dollar, as a weakened dollar encourages investors to buy gold, also normally considered a hedge or safe-haven during times of high inflation and economic uncertainty.