Thursday, March 20, 2008

Gold slides almost $60 US an ounce

Gold slides almost $60 US an ounce
Loonie drops below parity

Wednesday, March 19, 2008 CBC News

Gold futures took a big dive Wednesday as the precious metal lost some of its lustre following a smaller-than-expected U.S. interest rate cut.

The April gold contract on the New York Mercantile Exchange tumbled $58.50 to a settle price of $944.70 US an ounce.

The gold market had expected that the U.S. Federal Reserve would cut its key interest rate by a full percentage point on Tuesday. When it was cut by just three-quarters of a point, gold started to tumble.

Silver prices fell by eight per cent.

Better-than-expected earnings reports from three U.S. investment banks also bolstered investor confidence that some stability might be returning to the struggling U.S. financial system.

Recently, gold prices have also tended to track oil prices. On Wednesday, oil futures dipped almost $5 a barrel to $104.48 US a barrel.

The slide in gold, oil and other commodity prices sent the Canadian dollar below par with the U.S. currency. The loonie was down 2.19 cents to a close of 98.49 cents US.

The TSX gold sub-index fell 5.3 per cent, leading 427-point drop in the S&P/TSX composite index.

Barrick Gold shares slid $3.32 to close at $45.96; Goldcorp stock dropped $1.64 to $39.50; Kinross Gold fell $1.85 to $22.30.

Gold futures hit a record $1,033.90 US an ounce on Monday after the weekend collapse of the investment bank Bear Stearns sparked fears that other financial institutions might be at risk.

Even at current prices, gold has still gained $300 US an ounce in the past year.

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