Gold Holds Gains After Bank of England Raises Rate to 4%

The central bank said UK consumer price inflation rose to 3.5% in September and is now forecast to reach about 5% by the middle of next year. It cited rising global energy prices and the conflict in the Middle East, then in its ninth month, as factors behind the outlook. The BoE expects inflation to fall later as energy-price effects fade and restrictive monetary policy weighs on price pressures.

The Monetary Policy Committee offered little guidance on the path of future rates. It said decisions would be made meeting by meeting, with particular attention to whether high energy costs spread to other prices and the wider economy. The committee said it would monitor pay, pricing behaviour and economic slack, adjusting the Bank Rate as needed to return CPI inflation to its 2% target over the medium term.

Spot gold was last quoted at £3,065.90 an ounce, up 1.70% on the day. In dollar terms, it stood at $4,128.54 an ounce, a gain of 1.74%. The initial selling after the decision was modest, and the metal continued to hold its gains above critical support levels.