(Kitco News) - Falling interest rates worldwide are not providing major support for gold, which continues to experience technical selling pressure.
The Bank of England is the latest central bank to cut its interest rates further. In a much-anticipated move, the BoE cut its Bank Rate to 4.75% on Thursday.
The central bank said that it had room to cut rates as inflation is expected to remain near its 2% target.
“There has been continued progress in disinflation, particularly as previous external shocks have abated, although remaining domestic inflationary pressures are resolving more slowly,” the central bank said in its monetary policy. “Monetary policy has been guided by the need to squeeze remaining inflationary pressures out of the economy to achieve the 2% target both in a timely manner and on a lasting basis.”
Looking ahead, the BoE said that it expects to cut rates further through 2025, albeit at a cautious pace.
“Based on the evolving evidence, a gradual approach to removing policy restraint remains appropriate. Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further,” the statement said.
Despite the rate cut and signal of further easing, gold is struggling against the British pound. In spot markets, gold last traded at $2,062.25 an ounce, down 0.07% on the day. Gold was seeing some modest gains just ahead of the announcement.
Michael Brown, Senior Analyst at Pepperstone, said the BoE’s cautious tone as it normalizes interest rates was slightly more hawkish than expected.
“The next 25bp Bank Rate cut, then, is likely to come in February, in conjunction with updated forecasts. If, at that stage, policymakers have greater confidence in the disinflationary path being well-embedded, the pace of normalization could well quicken through the early part of 2025. Quarterly cuts, though, remain the base case for now,” he said.
