The BoE said it was likely to deliver stimulus to the economy in three weeks, once it assessed how Britain's vote to leave the European Union has affected the economy.
Two major U.S. stock indexes set fresh intraday record highs on investors' rosy outlook for big banks' second-quarter earnings, while the U.S. dollar fell for the third straight day.
Spot gold fell as much as 1.7 percent to $1,319.82 an ounce, the lowest since June 30, and was down 0.8 percent at$1,332.10 by 2:42 p.m. EDT (1842 GMT).
U.S. gold futures settled down 0.9 percent at $1,332.2 per ounce.
"Britain has got a new prime minister, which, alongside expectations of more stimulus from the Bank of England, has brought a sense of relief to markets, so gold is easing and everything else is rising on that," Citi strategist David Wilson said.
"But the whole process of Brexit negotiations, which hasn't started yet, implies financial risks that will be supportive for the metal in the medium term."
Several Fed presidents have made comments this week, including Kansas City's Esther George, a voter, who said on Thursday that higher demand for safe assets following Britain's vote to leave the European Union could push up the value of the dollar and impact U.S. growth.
Atlanta Fed President Dennis Lockhart, a non-voter, said the Fed should remain "cautious and patient" with any future interest rate increases as the fallout from the recent Brexit vote becomes clear.
KITCO analyst said “Gold is off around $10.00 today, but the heart of the story is that is with a nearly $4.00 positive assist from a weaker U.S. dollar. Otherwise gold would have been off $14.00 in total. Silver was also off today as the precious metals, except for palladium, felt the sting of hungry stock investors.”
Reference: Reuters, KITCO
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