On the 2nd November, the Bank of England announced an interest rate hike. The move sees the rate return to its 2016 figure of 0.5 per cent, having been halved to 0.25 per cent after the Brexit referendum.
Interest rates 2007-2017
The Bank last increased interest rates in May 2007, from 5.5 to 5.75 per cent, a move which was reversed in December that year.
Rates were then cut sharply following the financial crisis. Over the course of 2008 to 2009 the rate was lowered several times from 5.5 per cent at the start of 2008 down to 0.5 per cent by the end of 2009.
The Deputy Governor of the Bank of England, Ben Broadbent, suggested in an interview with the BBC that two further rate hikes will be needed in the coming years to return the UK to its 2 per cent inflation target.
What does this mean for me?
Higher interest rates mean banks charge more to lend money. Payments on mortgages, bank loans and overdrafts will likely increase. Banks have been typically slow to reflect the rate increase in their savings accounts but savers can expect to accrue an extra £25 a year for each £10,000 held in savings.
What does this mean for gold prices?
The hike in interest rates hasn’t had a noticeable effect on the price of gold, which is closely linked with US interest rates. The price of Sterling, however, decreased on the 2nd November, meaning the effective price of gold and silver in Sterling has risen.
- Between 02:00 and 18:00, the pound lost 1.73 per cent of its value against the dollar, falling from $1.329 down to $1.306 for £1.
- The price of a troy ounce of gold against Sterling therefore increased between the same times by 1.54 per cent, from £963.47 to £978.26.
A good time to sell scrap gold?
If you want to take advantage of the higher gold price in uncertain economic times and sell scrap gold, then contact us today to find out how much it could be worth. If you want to find out more about gold prices over October, read our update here.
