Gold futures fell the most in four months, dropping below $1,000 an ounce, after the Federal Reserve cut interest rates less than investors had expected.
The Fed yesterday reduced the overnight-lending rate 75 basis points to 2.25 percent. Interest-rate futures had shown a better chance at a reduction to 2 percent. Gold reached a record $1,033.90 on March 17 as previous cuts to the benchmark rate sent the dollar to an all-time low against the euro.
``One hundred basis points was priced into the market and so gold is correcting for that,'' said Joel Crane, a metals strategist at Deutsche Bank AG in New York. ``There's a lot of positions that need to be unwound. Gold performs better in a lower interest-rate environment.''
Gold futures for April delivery fell $26.80, or 2.7 percent, to $977.50 an ounce at 8:50 a.m. on the Comex division of the New York Mercantile Exchange. A close at this price would mark the biggest one-day drop for a most-active contract since Nov. 15. It's the first decline in seven sessions.
Silver futures for May delivery fell 49 cents, or 2.4 percent, to $19.475 an ounce. Before today, silver had gained 34 percent this year while gold had gained 20 percent.
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