Fed cut propels prices

Gold climbed in London on speculation that an interest rate cut in the US will boost bullion's appeal as an alternative investment to stocks and bonds.

Gold for immediate delivery rose as much as $4.36, or 0.5 per cent, to $894.68 an ounce and traded at $894.60 an ounce as of 9:13 am in London.

"Near-term direction of gold prices will be dominated by the financial markets' judgment of US Federal Reserve policy," James Steel, an analyst with HSBC Securities in New York, said in a note yesterday.