Gold Stumbles Against Canadian Dollar as BoC Holds Steady on Rates
Saturday, September 27th 2025
Gold is once again under pressure—this time, from the Canadian dollar—as the Bank of Canada (BoC) sticks to its monetary stance and holds interest rates steady. The decision to leave rates unchanged has further dampened gold’s momentum in the broader currency market, where central banks are showing signs of a synchronized pause.
A Pause, Not a Pivot
The BoC announced it would keep its overnight rate at 2.75%, alongside a Bank Rate of 3% and a deposit rate at 2.70%. While this decision met market expectations, it still reverberated through the currency space, weighing on gold prices denominated in Canadian dollars.
Despite the relatively strong start to 2025, Canada’s economy appears to be softening. The central bank warned that the global trade landscape remains unstable, largely due to ongoing tariff-related tensions—particularly those involving the U.S.
“After a robust first quarter driven by export acceleration ahead of tariffs, GDP likely contracted by about 1.5% in Q2,” the BoC said in its report. “This reflects a steep drop in exports and declining U.S. demand.”
Inflation Tug-of-War Continues
Although rates remain unchanged for now, the BoC made it clear that future moves will hinge on how inflation evolves. If the domestic economy continues to cool, and tariff-induced inflation remains under control, the door to future rate cuts is still open.
“We’re watching the balance between disinflation from economic slowdown and inflation from trade-related costs,” the BoC emphasized. “If downside pressure on inflation persists, further easing may be warranted.”
Gold Struggles for Traction
The yellow metal struggled to find support following the BoC’s announcement. In Canadian dollar terms, spot gold dropped 0.5% to $4,557.19 an ounce. Against the loonie, gold hit session lows as the Canadian currency found strength in the BoC’s wait-and-see stance.
The story wasn’t any brighter against the U.S. dollar. Spot gold traded at $3,398.10 per ounce—down nearly 1%—as the metal continues to lose ground amid hawkish caution from global central banks.
The Big Picture
For gold investors, this underscores a broader trend: with central banks globally reluctant to rush into easing cycles, gold’s performance in currency-adjusted terms may remain mixed. While macro uncertainty still supports long-term bullish outlooks, near-term headwinds—especially from currency strength—are hard to ignore.
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