Gold holds above £3,200 as dual rate-cut expectations steady prices

Gold consolidated above £3,200 per ounce on Monday, held aloft by persistent expectations of monetary easing from both the US Federal Reserve and the Bank of England. The metal pulled back modestly from Friday's spike to £3,221 but remained well supported.

The driver is straightforward: when central banks cut interest rates, the real yield on cash falls. With the Federal Reserve now widely expected to cut rates in September following July's disappointing nonfarm payrolls, and the Bank of England likely to follow suit by autumn, investors are repositioning toward assets with no yield, of which gold is the classic example. A softer dollar and lower Treasury yields both accompany rate-cut cycles, making precious metals cheaper for pound-based buyers.

The Bank of England's monetary policy committee meets on 17 September. Markets currently price a 60 to 70 per cent probability of a rate cut by that date, with some analysts arguing a cut may come sooner. Were the BOE to move before the Fed, sterling would likely weaken further, pushing gold prices higher in pound terms. At current exchange rates around 1.33 dollars per pound, every move lower in the dollar index directly lifts the sterling price of gold. For UK buyers, remember the all-in cost includes spot price, dealer premium, and delivery. This is not financial advice.