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The price of gold rose sharply against the background of the Bank of England's meeting, returning to three-week high. However, further price growth constrained by the strengthening dollar.
Recall, the Bank of England decided to reduce the key rate to 0.25% from 0.50%, and said that in September will start buying government and corporate bonds as part of an extensive program of measures designed to stimulate the British economy.
"Short-term and medium-term growth prospects have deteriorated markedly after Brexit," was noted in the statement of the Central Bank. The Bank also lowered its forecast for GDP growth next year to 0.8% from 2.3%. Bank of England expect to further reduce the key rate this year. This multilateral stimulus program indicates a strong concern for the leaders of the Bank of England over the economic outlook after the referendum. They stated that the economic growth will be 2.5 percentage points lower than they expected before the vote, reflecting a slowdown not only in the short term, but weaker growth as investment reduction.
Recall, gold becomes more attractive to investors than the profitable assets, when interest rates are falling.
"The revised expectations regarding the monetary policy of the USA, Japan, Euro-Zone countries and Britain played a major role in the growth of the price of gold so far this year, and we look forward to a continuation of this dynamic, - said Capital Economics analyst Simon Gambarini. - Monetary policy in the UK, the eurozone and Japan is likely to remain very accommodative, which should be positive for gold prices. "
Meanwhile, the gold reserves in the largest investment fund SPDR Gold Trust fell by 0.3 tonnes to 969.65 tonnes.
The cost of the August gold futures on the COMEX fell to $ 1361.10 per ounce.
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