Gold prices declined in local markets and the global exchange during Wednesday's trading, affected by the rise of the US dollar amidst conflicting statements regarding the developments of the war with Iran and the ongoing uncertainty over the possibility of reaching a sustainable agreement, especially with tensions in the Strait of Hormuz, according to the "Marsad al-Dhahab" report for economic studies.
Dr. Walid Farouk, a researcher in gold and jewelry affairs and director of the "Marsad al-Dhahab," stated that gold prices in local markets fell by about 55 pounds during today’s trading compared to yesterday’s close.
The price of a gram of 21-karat gold recorded 7,110 pounds, while the ounce on the global exchange dropped by about $29 to record $4,812 at the time of writing, according to World Gold Council data.
The price of 24-karat gold recorded approximately 8,126 pounds, 18-karat reached about 6,094 pounds, while the gold coin (Genieh) reached 56,880 pounds.
Local gold prices had decreased by about 5 pounds during Tuesday's trading, where 21-karat gold opened at 7,170 pounds, touched 7,130 pounds, before closing at 7,165 pounds. In contrast, the global ounce rose by about $100 yesterday, opening at $4,741 and closing at $4,841.
Farouk noted that the local price is currently trading approximately 56 pounds lower than the global price.
Global Market Movements
Gold prices on the global exchange declined during Wednesday's trading, giving up gains made yesterday after the yellow metal failed to exceed the $4,850 level, coinciding with a dollar recovery amid mixed statements regarding Iran.
This decline comes in light of the ambiguous path toward reaching a sustainable agreement between the United States and Iran, especially with continued tensions in the Strait of Hormuz, which supported the US dollar in rebounding from its lowest levels since early March, negatively reflecting on gold prices.
Conversely, US President Donald Trump expressed optimism about the possibility of ending the war, suggesting that peace talks could resume soon and that confrontations with Iran might end shortly.
On the ground, the US military confirmed the implementation of a full blockade on the Strait of Hormuz, while reports revealed that Washington is considering deploying additional troops to the Middle East to pressure Tehran, which could complicate de-escalation efforts.
For its part, Iran considered this move a violation of its sovereignty, while the Revolutionary Guard vowed to respond, keeping geopolitical tensions alive and enhancing the dollar's appeal as a reserve haven against increased pressure on gold.
Despite this, markets are still betting on the continuation of the diplomatic path, especially with the decreased likelihood of interest rate hikes by the Federal Reserve, which may limit the dollar's strength and curb gold's losses.
In the same context, US Vice President JD Vance expressed cautious optimism about reaching a comprehensive agreement to reintegrate Iran economically, while UN Secretary-General António Guterres suggested that talks between Washington and Tehran might resume soon.
Positive expectations regarding the diplomatic path had pressured the dollar over the past two weeks and contributed to supporting gold prices in maintaining levels above $4,800. Data released Tuesday showed that the US Producer Price Index (PPI) rose to 4% annually in March, compared to 3.4% the previous month.
On a monthly basis, the index rose by 0.5%, while the core index (excluding food and energy) rose by 3.8% annually in March. These readings were lower than consensus expectations, easing concerns about the inflationary impact of the sharp rise in energy prices resulting from the war and softening hawkish expectations.
The resulting decline in US Treasury yields is expected to limit the rise of the US dollar and support the emergence of buyers at lower gold prices.
The Fed and Inflation
On the monetary policy front, Federal Reserve officials' trends vary regarding the interest rate path. The President of the Chicago Fed indicated the possibility of holding rates steady this year, delaying any potential cut until 2027 if inflationary pressures related to energy prices persist.
Conversely, other officials believed that inflation might approach the target within a year, which could provide space for gradual monetary easing. The US Treasury Secretary confirmed that the Fed might adopt a wait-and-see approach given high oil prices and the repercussions of geopolitical tensions, despite the continued strength of the US economy.
Forecasts and Analysis
The director of the "Marsad al-Dhahab" stated that inflation data falling below expectations enhances the chances of later monetary easing, a traditionally supportive factor for gold, especially with ongoing geopolitical tensions in the Middle East.
Meanwhile, commodity market experts noted that gold's relative stability reflects a state of balance between strong investment demand and profit-taking operations, asserting that the market still leans toward a bullish trend in the medium term as long as interest rates remain stable without new increases.
In the same vein, Commerzbank analysts indicated that gold remains supported as long as inflation expectations remain under control, with limited downside opportunities in the absence of clear trends toward raising interest rates.
They also noted the gradual return of investment flows to gold-backed ETFs after a wave of liquidations in March, with global holdings rising by about 25 tons since the beginning of April, compared to an outflow of 85 tons the previous month.
Follow the latest news on Google News
