RTTN: Gold Continues Upward Move Amid Expectations Of Possible Rate Cuts
(RTTNews) - Gold added another 2.8% on Tuesday in U.S. trading. December gold moved to $890.50, up $24.30 on the session. Prices hit as high as $891.80, gold's highest mark since Oct. 1 as investors continued to turn to the precious metal as a hedge investment.
The Reserve Bank of Australia reduced its key interest rate by 100 bps to 6% on Tuesday in what many feel will be one of many rate cuts around the globe. The Bank of England is expected to slash its rates later on Thursday. Last week, the European Central Bank left its rates alone but hinted cuts may be coming by the end of the year.
In the U.S., traders anxiously await the release the minutes from the last Federal Reserve meeting. Investors will be seeking clues as to how the Fed may react at its next meeting.
Fed Chairman Ben Bernanke will speak at the National Association for Business Economics annual meeting in Washington today. Minneapolis Federal Reserve Bank President Gary Stern will be in Chicago to speak about the repercussions from the financial shock at a Council of Institutional Investors conference.
The dollar was steady Tuesday morning in New York, remaining near long-term highs versus most other majors in the previous session. The buck lingered near a yearly high of 1.3442 and a 2 1/2-year high against the sterling.
Crude oil prices turned back higher after plunging to a multi-month high in the previous session. Light sweet crude moved as high as $91.53 a barrel in early going. Oil fell as low as $87.56 on Monday amid concerns that the credit crisis may slow energy demand.
Gold soared on Monday as traders turned to the precious metal's safety appeal amid ongoing turmoil in the financial sector. December gold ended the day at $875 an ounce, up $33 for the session. Prices hit as high as $879.00.
The flight to gold as well as the tumbling stock markets showed traders have a lack of confidence that the $700 billion rescue bill passed by Congress will help stabilize the U.S. financial system. Gold has seen highly volatile movement in recent weeks as the credit crunch continued to spread around the world.
Gold lost $11.10 on Friday as the House finally approved the sweetened bill to bail out struggling banking companies by a solid 263 to 171 margin. This came four days after an original plan was voted down, sending investors towards gold as a safety option.