Gold holding steady as Bank of Canada leaves rates unchanged
The gold market is holding its ground against the Canadian dollar as the Bank of Canada leaves interest rates unchanged and adopts a neutral, yet cautious, wait-and-see approach to inflation.
As expected, Canada's central bank left its overnight rate unchanged at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.
At the same time, the BoC struck a relatively positive tone in its outlook for the Canadian economy.
“Canada’s economy is showing signs of improvement. Growth is picking up and inflation is projected to ease gradually from its recent spike. There are still important risks and uncertainties related to the war in the Middle East and US trade policy,” the central bank said in its Monetary Policy Report.
Because of heightened uncertainty, the BoC provided little forward guidance in its statement.
“Governing Council will continue to assess the strength of the Canadian economy and the outlook for inflation, and is prepared to adjust monetary policy as needed. The Bank is committed to maintaining Canadians’ confidence in price stability through this period of global upheaval,” the central bank said.
The BoC's rate decision is having little impact on domestic gold prices, as the precious metal continues to follow broader market trends. Spot gold, denominated in Canadian dollars, last traded at C$5,712.21 an ounce, up 0.24% on the day.
In comparison, spot gold, denominated in U.S. dollars, last traded at US$4,062.20 an ounce, up 0.26% on the day.
The gold market is holding its ground as inflation pressures begin to ease, giving global central banks room to maintain relatively neutral monetary policies.
