(Kitco News) - Gold prices remain under pressure as the ongoing chaos in the Middle East forces central banks to maintain their current monetary policies. The Bank of England is the latest to keep its Bank Rate unchanged.
As expected, the BoE said it would maintain its key interest rate at 3.75% to keep inflation pressures in check.
“Conflict in the Middle East has caused a significant increase in global energy and other commodity prices, which will affect households’ fuel and utility prices and have indirect effects via businesses’ costs. Prior to this, there had been continued disinflation in domestic prices and wages. CPI inflation will be higher in the near term as a result of the new shock to the economy,” the central bank said in its monetary policy statement. “Monetary policy cannot influence global energy prices but aims to ensure that the economic adjustment to them occurs in a way that achieves the 2% target sustainably.”
Although the central bank is monitoring second-round inflation risks, it also faces a difficult environment marked by slowing growth and a weakening labor market.
“UK GDP had expanded by 0.1% in 2025 Q4, slightly below the 0.2% rate expected in the February Report. Notwithstanding some divergence in the signal from different business surveys, activity had remained subdued in 2026 Q1 with monthly GDP flat in January. Bank staff continued to estimate that underlying quarterly GDP growth for Q1 would be around 0.1 to 0.2%,” the central bank said. “Labour demand had remained weak. The Labour Force Survey unemployment rate had been 5.2% in the three months to January, unchanged from December and close to the expectation in the February Report.”
The gold market is seeing little reaction to the BoE’s latest monetary policy decision, as the current global environment continues to create strong headwinds. Against the British pound, spot gold was last trading at £3,474.89 an ounce, down more than 4% on the day.
Gold’s selloff against the pound is in line with the broader market. Spot gold was last trading at $4,617.90 an ounce, down 4% on the day.
There is one likely factual inconsistency in the draft: a drop to £3,474.89 and $4,617.90 would not align with “down 4%.”
