Gold Faces Pressure from Global Policy Tightening as BoE Shows Growing Rate Hike Support

Gold is struggling to build momentum amid a shift in global monetary policy toward higher interest rates. The ECB led the way with a 25 basis point hike last week, while the Fed signaled at least one increase before year-end. The Bank of England is also moving in a more hawkish direction.

The BoE held its Bank Rate at 3.75%, yet two committee members voted for a 25 basis point rise, surpassing economists’ forecasts of just one such vote. The bank stressed challenges from rising energy prices pushing inflation higher alongside a weakening economy, while reaffirming its commitment to the 2% inflation target.

Gold showed minimal reaction to the decision. Spot gold traded at £3,211.84 per ounce, down 0.37%, and at $4,247.60, down 0.20%. Markets now price in roughly 35 basis points of further tightening this year.