Thursday, Sept 18, 2008
Gold rose on Thursday after a coordinated effort by central banks to stabilize the dollar, consolidating bullion’s biggest-ever one-day rise the previous day and ensuring its status as a safe-haven asset was intact.
The Federal Reserve and the world’s top central banks offered to pump billions of dollars into global money markets on Thursday in a coordinated effort to ease a funding squeeze triggered by the upheaval on Wall Street.
The concerted action follows a rout in financial markets, roiled by fears of more Wall Street failures in a week that has seen Lehman Brothers file for bankruptcy, Merrill Lynch lose its independence and a $85 billion U.S. government bailout of insurer AIG.
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“Doubts stay over the dollar after the central banks’ move,” said Tatsuo Kageyama, analyst at Tokyo-based Kanetsu Asset Management Co.
“The question — who’s going to be the next — is still hanging over. Even if the dollar rose, people would think that is just a temporary rise,” he said.