Daily Gold Update

Source: MarketWatch

New York— Gold prices suffered their worst one-day drop in nearly two years Wednesday, as the dollar gained more ground and the Federal Reserve refocused attention on fighting the inflation fears that have underpinned gold's bull run. On a day that saw broad declines for all commodities, gold for April delivery, which had hit a record high of $1,034 an ounce Monday, plunged $59, or 5.9%, to finish at $945.30 an ounce, its biggest single-session loss since June 2006.

Moving to rejuvenate an economy besieged by the housing slump and the credit crisis, the Fed lowered its key federal funds rate by three-quarters of percentage point to 2.25%, its lowest level since December, 2004. At the same time, the Fed signaled that it wasn't as convinced as it had been earlier that prices increases would moderate. "Still, uncertainty about the inflation outlook has increased," the statement warned. In another sign that Fed actions and comments were flagging inflation concerns and perhaps limiting the extent of future rate cuts, the dollar rallied on Tuesday, helping lead to a broad sell-off in commodities Wednesday. With the Fed aggressively lowering interest rates since last year, the dollar has plunged. See full story.