Gold slips as Fed cuts interest rates

Gold slips as Fed cuts interest rates

	Published : Tue, 11 Dec 2007 20:35 By : Agencies Print this Story

NEW YORK (AP) - Gold prices fell in aftermarket trading Tuesday after the Federal Reserve lowered its benchmark interest rate by a quarter point to 4.25 percent. The dollar bounced higher.

The Fed's move was widely expected and had largely been priced into the value of the dollar and many commodities; the quarter-point cut disappointed some investors who were hoping for a more aggressive half-point reduction.

Precious metals slumped as the dollar advanced.

Lower interest rates tend to depress a country's currency and drive investors to shift funds to hard assets, like gold. But the Fed's third rate cut this year wasn't sharp enough to shock the dollar into further submission, given that the greenback had already fallen ahead of the decision.

Commodities prices were mixed following the Fed's decision, although some markets were officially closed and trading took place electronically. Precious metals slipped, while energy prices climbed broadly.

February's gold contract dipped $1.50 to $812 an ounce in aftermarket trading on the New York Mercantile Exchange. March silver futures fell 12.5 cents to $14.725 an ounce in aftermarket activity.

The dollar gained against the euro while trading mixed against other major currencies. The 13-nation euro bought $1.469, down from $1.4712 late Monday.

The Fed also lowered its discount rate by a quarter point to 4.75 percent.

Energy prices rose. Light, sweet crude for January delivery jumped $2.18 to $90.04 a barrel on the Nymex just before the market close. Gasoline futures added 4.26 cents to $2.2927 a gallon, while heating oil futures gained 4.81 cents to $2.5255 a gallon.

Industrial metals finished mixed on the London Metal Exchange ahead of the Fed's decision, with nickel and zinc pulling higher while copper, lead and tin slipped back. Nymex copper for March dipped 3 cents to $3.063 a pound.

Agricultural futures ended in a mixed range on the Chicago Board of Trade, which closed as the Fed released its statement.

March corn was quoted up 6 cents at $4.2375 a bushel, while January soybeans added 8.75 cents to $11.345 a bushel. Wheat for March delivery lost 20.5 cents to $9.09 a bushel.