quick post on interest cuts: gold to benefit?

Agreeing with a friend today who thought US interest rate would go way down, I bought some gold (XGD actually) ... it was a lucky move as it went up almost 3% from the price at which I bought it. Since I manage my father's portfolio as well and bought some for him, it was a double win.

Why gold when interest rates go down?

This article from the New York time summarizes it well:

Some aspects of today’s Fed’s move could fuel inflation fears. Gold, a traditional investment safe haven in times of inflation, soared immediately after the Fed’s decision was announced. As United States interest rates became less attractive for investment, the value of the dollar against the euro touched a new low before recovering slightly, and oil prices continued to climb even further above $80 a barrel.

Disclaimer: this is not investment advice. Buying on news like that is a type of market timing that can be risky.