STEVE INSKEEP, host:
May be time to sell off some of that gold jewelry that you never wear because the price of gold hit a 28-year high yesterday after the Federal Reserve decided to cut interest rates by a quarter point.
If you're wondering about the connection between gold and interest rates, take a listen to NPR's Jim Zarroli.
JIM ZARROLI: Wall Street has been a gloomy place lately. The subprime mortgage crisis has cut into the profits at a lot of big firms. And lately the odds of a recession have seemed to grow every day.
Yesterday, investors were waiting for the Federal Reserve to come to the rescue by cutting interest rates, and they got what they wanted. The Fed cut both the discount rate and the federal funds rate a quarter point. That makes it cheaper to borrow money and helps banks that are trying to juggle bad investments. But the Fed's message was mixed. It issued a statement suggesting that the downside risks to the economy had eased and that this latest rate cut could be the last.
As the day dragged on, the picture that emerged was of an economy that was stronger than a lot of economists had assumed. The commerce department said the economy grew at an annual rate of nearly four percent last quarter. With interest rates falling, the dollar lost value and the price of gold topped $800 an ounce - levels not seen since the Jimmy Carter administration.
Meanwhile, the government reported another drop in oil inventories and the price of a barrel of oil finished at more than $94. The surge in oil and mining stocks sent share prices higher, and by the end of the day the Dow Jones Industrial Average was up one percent.
Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
