Gold surges past $800
Associated Press
October 31, 2007 at 3:20 PM EDT
Gold barreled above $800 (U.S.) an ounce Wednesday for the first time since 1980 as investors cheered the Federal Reserve's decision to lower its benchmark interest rate by a quarter point.
The Fed lowered its federal funds rate to 4.5 per cent, as the markets had widely expected. Lower interest rates tend to undermine the U.S. dollar and raise the allure of precious metals as an investment alternative. The dollar stumbled to another low against the euro and other currencies following the Fed's decision on Wednesday, helping drive gold higher.
Although the regular trading sessions of most commodities markets were closed before the Fed released its decision, gold prices continued to climb in aftermarket trading. An ounce of gold settled at $795.30 an ounce on the New York Mercantile Exchange, then rose to a high of $800.80 ounce in later electronic activity.
Gold last topped $800 an ounce in 1980, when prices reached as high as $875 an ounce in January. Adjusted for inflation, an $800 ounce of gold in 1980 would be worth more than $2,000 today.
The euro, which hit a high for the fourth straight trading day, bought a record over $1.45 in afternoon trading.
In the energy market, light, sweet crude for December delivery gained $4.13 to $94.51 in electronic trading on the Nymex.
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