Metals decline but gold stays strong following US rate cut

Jan. 24, 2008 - PRLog -- Metals such as copper have fallen this week despite the emergency interest rate cut introduced by the US Federal Reserve.

"I think the emergency cut has caused even more concern that the US is headed for a recession, which is not good for metals demand,'' Wang Xiaodan, an analyst at Minmetals StarFutures, told Bloomberg.

A Tokyo-based analyst at commodity broker Okachi, Takaki Shigemoto, told the news service: "Investors are taking money off the table from risky assets such as commodities.

"People prefer to hold cash. The rate cut was the Fed's confirmation that the economy is worsening."

However, the market for gold is remaining "bullish", a senior commodity strategist at Australia and New Zealand Banking Group, Mark Pervan, said.

"We'll continue to see the Fed act aggressively, which will put pressure on the dollar, and we'll see more people switching to gold,'' he explained.

Morgan Stanley is tipping gold to break through US$1,000 per ounce barrier this year, finding "support from a host of factors, primarily growing inflationary concerns and the increased likelihood of a US recession".

Further analysis of the commodities market for metals could be supplied by Aranca, an end-to-end provider of on-demand, custom investment, business and economic research.

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