Bullions rallied as investors rushed to buy safer assets to seek refuge from the worst financial crisis in nearly 80 years. And U.S fed also cut interest rate by 50 bps from 2% to 1.50%.Physical demand for gold also has shot up as the banks being taken over by governments or sold to their rivals prompted consumers to invest in gold coins. Government debt prices jumped as the equity selloff reached a fever pitch and investors snatched anything resembling stability on an increasingly grim outlook, especially after Federal Reserve Chairman Ben Bernanke warned turmoil in markets could cause U.S. economic activity to be subdued into 2009 and by evening fed curbed its interest rates. European Central Bank also trimmed its rate from 4.25% to 3.75%.
Crude slipped below $88 a barrel as concerns the global financial crisis will crimp oil demand overshadowed signs that OPEC producers may consider a supply cut. An increase in inventories could put further pressure on crude prices. Crude stocks probably rose for the second week in a row last week as imports continued to rebound after storm disruptions. Libya joined fellow OPEC members Iran and Iraq in expressing concern this week about the impact of the crisis on oil demand.” If this volatility continues, OPEC will have to do something," Shokri Ghanem, chairman of Libya's National Oil Corp. OPEC's next scheduled meeting is in Algeria in December.
Base metals plunged on fears over the health of the global economy and worsening demand prospects for industrial metals. But as news of central banks cut interest rates hitted the market, they trimmed losses after fallen more than 7 percent on fears over the health of the global economy. Other base metals recovered from earlier sharp losses after the coordinated action by the central banks. Lead was at $1,578/1,588, down $52 after touching a 3-months low of $1,575 and zinc shed $52 to $1,498/1,508 after hitting a three-year low of $1,470. Aluminium fell to a near three-year low of $2,230 a tonne before trading at $2,253/2,262, down $51 or 2.2 percent. Nickel fell to a 35-months low at $13,200 a tonne, down $1,000 or 7 percent.
