Gold rallied above $850 an ounce on Tuesday after the Federal Reserve slashed U.S. interest rates to fight a global economic slowdown, bolstering bullion's appeal as a hedge against inflation.
Spot gold was last at $856.60 at 4:00 p.m. EST (2100 GMT), up 2.2% from $837.80 an ounce late on Monday in New York. U.S. February gold rose nearly 3% to a two-month high of $860.80 an ounce on the COMEX division of the New York Mercantile Exchange, after settling up $6.20 to $842.70 prior to the Fed announcement.
"Lower interest rates reduce the opportunity cost of holding gold," said Standard Chartered analyst Daniel Smith. Even as fears of deflation prompted the Fed to slash rates, gold retained its allure as an inflation hedge among investors watching central banks flood financial markets with money.
Platinum was at $857.50 an ounce, up 5% from its previous finish of $817 in New York late on Monday. Palladium was at $178.00, which was 4.1% above Monday's late quote of $171. Traders are awaiting more news on a mooted U.S. plan to bail out beleaguered carmakers—the main buyers of platinum.
Platinum reached parity with gold for the first time since 1996 on Thursday and is holding just below the yellow metal. Spot silver was at $11.11, which was 4.6% higher than its Monday close of $10.62.