Gold Rises to Highest Since 1980 as Fed Lowers Rate to 4.75% By Pham-Duy Nguyen Sept. 18 (Bloomberg) -- Gold rose to a 27-year high after the Federal Reserve cut its benchmark rate, sending the dollar to a record low against the euro and boosting the appeal of the precious metal as a hedge against the U.S. currency. The Fed lowered the federal funds rate by 0.5 percentage point to 4.75 percent, the first cut in four years. The dollar fell to an all-time low against the euro after the announcement. Five of the past six bear markets for the U.S. currency have sparked a rally in gold. ``Investors are scared,'' said Ron Goodis, futures trading director at Equidex Brokerage Group Inc. in Closter, New Jersey. ``The rate cut is inflationary and money is flowing into gold as a hedge.'' Gold futures for December delivery rose $9.60, or 1.3 percent, to $733.40 an ounce at 1:55 p.m. in after-hours trading on the Comex division of the New York Mercantile Exchange, the highest since Feb. 11, 1980. A cut of 50 basis points or more would weaken the dollar further and spark a rally in gold, analysts said before the rate cut was announced. ``The key factor will be the dollar,'' said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. The euro reached a record $1.3964. Gold futures reached a record $873 an ounce in January 1980.