Royal Mint sees surge in demand for gold after BoE interest rate cut

The Royal Mint saw demand for gold soar in the first week of August after the Bank of England cut interest rates.

The Mint experienced a 25% increase in transactions on its bullion website after the BoE voted to slash its benchmark rate by 25 basis points to 0.25% on 4 August, the first cut in seven years.

Investors turned to gold bars and coins - with the Mint seeing a 50% increase in sales- as opposed to cash and bonds, which are considered to offer diminishing returns, worsened by lower interest rates.

The price of gold has risen by 45% in sterling terms and 25% in dollar terms so far this year.

"It's worth pointing out gold is by no means a one way bet - in 2011 it was trading at above $1800 an ounce," said Laith Khalaf, senior analyst at Hargreaves Landown.

“It's an insurance policy for the rest of your investments and as such should make up no more than 5-10% of your portfolio."

Khalaf added that although the stock market has been doing well of late, it had a rough start to the year and there was abundant volatility around the time of the European Union referendum. "That helps gold,” the analyst said.

Gold was trading at $1347 an ounce at 1700 BST on Friday.