The price of gold hit a new all-time-high last week, rising to over $2750 per ounce, fuelled by ongoing tensions in the Middle East, uncertainty ahead of the US election and expectations of further rate cuts from central banks. One expert predicted that $3,000 per ounce gold will “be breached with a high degree of certainty and it could even happen before we close the door on 2024”.
The uncertainty, domestically, is not being helped by ongoing leaks and statements coming out of Number 11. As gold soars to new highs, there are growing concerns that this week’s Budget could send UK Plc back to the Bronze Age, with increased National Insurance looking a nailed-on certainty. Experts have said this could be the final nail in the coffin of many small business owners and see many shut up shop once and for all after Brexit, Covid, double-digit inflation and higher interest rates.
On the latter front, the usual 2025 rate predictions have already started, with Goldmans Sachs saying that the UK base rate could be 2.75% by this time next year. Clearly the media lapped it up, as it’s Goldmans after all and the legacy media would write up the CEO’s shopping list, but experts slammed it as “far-fetched”, “eyebrow-raising” and “the stuff of fairy tales”. Santander expects Bank Rate to be 3.75% by this time next year, which was seen as more realistic and less clickbaity by those in the know.
One clear sign that markets are expecting further cuts to the base rate came from NatWest on Wednesday as the lender announced what one broker described as “highly aggressive” reductions of up to 0.41% across its mortgage range. NatWest appears to be looking beyond the Budget to the rate cuts the Bank of England is expected to make in the months ahead, starting on 7 November.
But looking beyond the Budget is something most regular businesses are fearful of doing — and it’s impacting their growth as a result. UK private sector growth slipped to an 11-month low in October, according to the latest flash UK PMI, which came in at 51.7, down from 52.6 in September. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said: “Business activity growth has slumped to its lowest for nearly a year in October as gloomy government rhetoric and uncertainty ahead of the Budget has dampened business confidence and spending.”
All in all, last week was very much about this week — and for now, in a strange curvature of logic and time, it’s a week many already want to forget.
