Business | Markets
Gold surges 3.5% as dollar and equities slip
The US currency had already traded lower for much of the session as expectations for a US rate hike receded after comments from the Federal Reserve on Wednesday.
- Reuters
- Published: 00:07 June 27, 2008
London: Gold surged 3.5 per cent yesterday as the dollar weakened against the euro and as equity markets slipped.
The US currency had already traded lower for much of the session as expectations for a US rate hike receded after comments from the Federal Reserve on Wednesday.
Gold rose to $909.60/$910.60 an ounce at 1410 GMT from $879.60/$880.60 an ounce late in New York on Wednesday. It touched $910.60 during the session, its highest since May 27.
A weak dollar and a slide in the equity markets on concerns over the health of the automotive sector "has been critical for gold", Merrill Lynch analyst Daniel Hynes said. "This has set gold off again after it had been stuck in a trend for a while now," he said.
Platinum and silver tracked gold higher, rising three per cent and nearly five per cent respectively.
The US Federal Reserve dampened hopes for a rate hike, saying inflation, while still a worry, was likely to temper later in the year.
"The Fed wasn't as hawkish as the market expected, hence the dollar is under pressure," said JPMorgan analyst Michael Jansen.
"People are starting to worry that the Fed might be slightly behind the inflation story."
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