Daily Gold Update

Source: MarketWatch

New York— Gold futures rallied more than 6% in electronic trading Wednesday, as the dollar tumbled after the Federal Reserve surprised investors and said it will buy long-term Treasurys, raising gold's appeal as an investment alternative. By buying Treasurys, the Fed is essentially creating more money to buy national debt, which weighs on the dollar. The rally in gold came after the metal lost 3% to end at a two-month low in floor trading, which ended before the Fed's announcement. Gold for April delivery rose $57, or 6.4%, to $946.10 an ounce in late afternoon North American trading. It ended floor trading at $889.10 an ounce, the lowest closing level for the contract since Jan. 22. By Wednesday's close, gold had lost 4.4% this week, and was more than $110 lower than its recent high above $1,000, hit on Feb. 20.

At the end of a two-day meeting in mid-afternoon, the Fed said it was committed to buying $300 billion in longer-term Treasurys to help the struggling American economy recover. The central bank also tweaked its other credit-easing programs by committing to buy more mortgage-backed securities and agency debt and include more asset-backed securities under a new credit facility starting this week. The dollar plunged after the decision, with the dollar index, which gauges the value of the greenback against its major rivals, down nearly 3% to 84.616. A weakening greenback tends to push up dollar-denominated gold prices. See full story.