The price of gold has climbed to a new all-time high in the UK today as major countries announce their latest interest rate decisions.

Following a strong few months, gold has now hit $1,950 in the US, but the weaker pound here in the UK has helped proper the precious metal to a new record – currently standing at £1,592.60 per ounce. Forecasts suggest this could push higher in the coming weeks however, and £1,600 per ounce now seems like a strong possibility.

020223 GBP Chart

The Federal Reserve announced a smaller hike on Wednesday of just a quarter percentage point, its smallest increase in some time. The shift had been expected, with inflation figures suggesting a peak, and the US economy showing some initial signs of weakening. Fed Chairman Jerome Powell warned however that inflation remained high and that hikes would likely need to continue before they would be satisfied inflation was truly on the downward path.

The Bank of England increased UK rates by 0.5% points today to a 14-year high of 4%. With the UK economy already forecast to enter a recession, the increased cost of borrowing will do little to help. House prices have already started to fall in recent months as mortgage rates rise, and the cost-of-living crisis worsens for many British consumers and businesses.

The BoE have stated they believe that inflation has peaked, but given it remains in double digits this still represents a painful ongoing increase in prices. Having narrowly avoided contraction in Q4 2022, the BoE now expects a shorter, and shallower recession in 2023, lasting five quarters and into 2024.

The European Central Bank also increased rates by half a percentage point to 2.5%, but this still leaves their rates lower than those of the US and UK. With powerhouse economic countries like Germany already halfway to a recession despite the ECB lagging on rates makes for a grim economic outlook for many European countries in 2023.

With gold forecasts for 2023 seeing $2,000 per ounce and beyond, the UK is also likely to see some further records in 2023, and with such a fragile economic landscape there may be further surprises to come for gold in the months ahead.