(Kitco News)- The gold market continues to consolidate at elevated levels even as the Bank of England left interest rates unchanged, though by only a small majority.
In an expected move, the BoE voted by a majority of 5–4 to maintain the Bank Rate at 4%. Meanwhile, four members voted to cut the Bank Rate by 25 basis points, to 3.75%.
The vote was closer than expected, as economists had anticipated only three members would vote for a cut.
The gold market is not seeing a major reaction to the BoE’s monetary policy decision. Spot gold last traded at £3,068.97, up 0.62% on the day.
Although the BoE is pausing its current cutting cycle, it has signaled that there is still room for rates to move lower. The central bank also highlighted the potential for inflation to fall below its target.
“he risk from greater inflation persistence has become less pronounced recently, and the risk to medium-term inflation from weaker demand more apparent, such that overall the risks are now more balanced. But more evidence is needed on both,” the monetary policy statement said. “The restrictiveness of monetary policy has fallen as Bank Rate has been reduced. The extent of further reductions will therefore depend on the evolution of the outlook for inflation. If progress on disinflation continues, Bank Rate is likely to continue on a gradual downward path.”
Michael Brown, Senior Market Analyst at Pepperstone, said that he expects the BoE to resume its easing path in early 2026 as inflation pressures weaken.
“My base case remains that the next 25bp Bank Rate cut will come at the February meeting, by which point the MPC will likely have accumulated sufficient evidence to be comfortable that price pressures have peaked, and that the risk of inflation persistence has receded. Risks to this call, however, tilt in a dovish direction, and the potential for a December cut, particularly if labour market slack to emerge in a more rapid, and significant, manner than currently expected,” Brown said.
