"When ever the price of gold falls it is good news for the economy !"
NEW YORK -- Gold futures plunged to a four-month low Tuesday after a stronger dollar and a drop in crude prices fed selling of the metal traditionally viewed as a hedge against inflation. Other commodities fell in a broad sell-off, with silver, copper, heating oil and agriculture futures all trading lower. The dollar strengthened against several major currencies as investors bet that the Federal Reserve may be poised to wind up its interest-rate cutting campaign and turn its attention to curbing inflation. The Fed, which begins a two-day policy meeting Tuesday afternoon, is expected to cut its benchmark rate...
Lower rates can boost the economy but tend to undercut the dollar, encouraging investors to buy hard assets like gold, which is known for holdings its value.
"Many people expect tomorrow's rate cut will be the last for some time, so that would alleviate some downward pressure on the dollar and take away from the upward pressure on gold," said Carlos Sanchez, analyst with CPM Group in New York.
Gold for June delivery dropped $18.70 to settle at $876.80 an ounce on the New York Mercantile Exchange. The contract earlier fell as low as $873.80, its lowest level since Jan. 22. Gold is up 3 percent so far this year but has retreated far from its record of $1,038.60 set March 17.
Analysts blame the slide on profit-taking after the run-up, weak demand for jewelry and a sense among investors that the worst of the credit crisis may have passed, which would diminish gold's allure as a safe-haven metal.
http://biz.yahoo.com/ap/080429/commodities_review.html
