NEW YORK (AP) - Gold prices edged higher Tuesday as the dollar sank against major currencies after the Federal Reserve cut its key interest rate to the lowest level on record.
Other commodities were mixed.
The Federal Reserve on Tuesday set its target for the rate at which banks lend to each other to a range of zero to 0.25 percent. This is down from the 1 percent target rate set by the Fed at its previous meeting in October, and was a steeper cut than analysts had expected. The central bank also said it will use ''all available tools'' to jump-start the economy.
Lower interest rates can spur economic activity, but they can also weaken the dollar and trigger inflation. On Tuesday, the dollar plunged against the euro and the British pound. Commodities, which are often used as a hedge against inflation, tend to benefit from a weaker greenback.
The Fed announcement sent stocks soaring. The Dow Jones industrial average surged 360 points, or 4.2 percent, and broader indexes jumped more than 5 percent.
Meanwhile, demand for government bonds spiked. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.28 percent from 2.53 percent late Monday.
Gold for February delivery rose $6.20 to settle at $842.70 an ounce on the New York Mercantile Exchange.
Other precious metals prices were mixed. March silver added 8.5 cents to $10.70 an ounce, while March copper futures slipped 2.65 cents to $1.3785 a pound.
Oil prices declined on the Nymex as OPEC powerhouse Saudi Arabia said oil production would be cut by 2 million barrels per day. The Organization of Petroleum Exporting Countries, which accounts for 40 percent of global supply, has struggled to halt falling crude prices as demand falters.
Light, sweet crude for January delivery fell 91 cents to settle at $43.60 a barrel. The decline in prices suggested that oil traders and brokers expected talk of an even bigger cut.
In other Nymex trading, gasoline futures rose less than a penny to settle at $1.04 a gallon, while heating oil also gained less than a penny to $1.4603 a gallon.
Grain prices advanced on the Chicago Board of Trade.
March wheat futures rose 24 cents to $5.44 a bushel, while corn for March delivery rose 18.75 cents to $3.94 a bushel.
March soybeans gained 13.5 cents to settle at $8.63 a bushel.
