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Gold traded just below its session highs after the Bank of England left interest rates unchanged following its September monetary policy meeting. The metal gained against both the British pound and the US dollar as the broader global market recovered from Wednesday’s selloff.

The BoE announced Thursday that it would maintain the Bank Rate at 3.75%. The decision was widely anticipated, and the breakdown of the committee vote also matched expectations surrounding the closely watched meeting.

Three committee members voted in favor of a 25 basis point increase. The majority, however, supported holding the Bank Rate steady as officials assessed persistent inflation pressures and the economic consequences of the global energy crisis.

The central bank acknowledged that inflation remains elevated and could rise further over the coming quarters. It also identified the war in Iran as a major factor behind the latest increase in pressure because the conflict has created a significant global energy crisis.

That energy shock now stands at the center of the BoE’s policy calculations. The committee indicated that the monetary response will depend on both the duration and the scale of the shock, along with how its effects spread through the British economy.

“UK CPI inflation increased to 3.1% in August and is likely to rise further over coming quarters. Monetary policy is being set to ensure inflation comes down to 2% sustainably as the economy adjusts to the energy shock. The policy stance required to achieve this will depend on the scale and duration of the shock and how it propagates through the economy,” the central bank said in its monetary policy statement.

The statement presented officials with a difficult policy backdrop. Inflation was above the central bank’s stated 2% objective in August, while the energy disruption introduced another source of uncertainty for the economy and the future direction of rates.

Gold received a modest lift in its initial response to the BoE announcement. The precious metal traded slightly ahead of the wider market recovery and remained close to its session highs after the rate decision became public.

Against the British pound, spot gold last traded at £3,237.07 an ounce. That represented a gain of 1.58% on the day, reflecting the metal’s firm performance in sterling terms following the September policy meeting.

The gains were not confined to the British market. Gold was also participating in a healthy global recovery after a sharp selloff on Wednesday, when another major central bank delivered a rate increase and pointed toward an additional move.

The Federal Reserve raised interest rates by 25 basis points on Wednesday. It also signaled that it expects one more rate increase by year end, adding another important policy development for the global gold market.

Despite that earlier selloff, spot gold recovered in US dollar terms. It last traded at $4,325.60 an ounce, an increase of 1.48% on the day and just below the session’s strongest levels.

The moves showed gold advancing in both currencies cited in the market update. Its gain against the British pound was slightly larger than its rise against the US dollar, although both readings showed a meaningful daily recovery.

For the BoE, the immediate focus remained the tension between persistent inflation and an economy adjusting to the energy shock. The vote revealed that three members preferred a rate increase, but the committee ultimately kept the benchmark unchanged at 3.75%.

The gold market’s response was positive but measured after the BoE decision. Bullion’s modest initial boost developed alongside the broader recovery, leaving spot prices higher by 1.58% in pounds and 1.48% in dollars.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.