Dollar Drives Gold Higher in Egypt Despite Stable Global Market

Gold prices in the Egyptian local market rose during midday trading on Monday, supported by the continued appreciation of the U.S. dollar against the Egyptian pound, while gold prices on international markets traded within a relatively narrow range. Investors continue to monitor the U.S. Federal Reserve's monetary policy outlook and developments in oil prices, which have renewed concerns over persistent global inflationary pressures.

The price of 21-karat gold increased by approximately EGP 40 compared with the end of last week, reaching around EGP 5,860 per gram, while the global gold price rose by about $11 to approximately $4,028 per ounce.

Meanwhile, 24-karat gold traded at around EGP 6,697 per gram, 18-karat gold reached approximately EGP 5,023 per gram, and the gold pound coin was priced at around EGP 46,880.

During the previous week, local gold prices had declined by around EGP 30 per gram. Twenty-one-karat gold opened the week at EGP 5,850 and closed at approximately EGP 5,820. Globally, gold fell by about $103 per ounce, declining from $4,120 at the beginning of the week to $4,017 at Friday's close.

The Egyptian gold market began the new trading week on a positive note despite the global gold price moving within a narrow range, highlighting the continued dominance of domestic factors—particularly movements in the U.S. dollar exchange rate—over local gold pricing.

The U.S. dollar continued to strengthen against the Egyptian pound during Monday's trading, surpassing EGP 51, limiting the impact of relatively stable global gold prices and supporting higher local gold prices.

Renewed pressure on the Egyptian pound coincided with an acceleration in foreign investor outflows from government debt instruments. Net sales by Arab and foreign investors in Egypt's secondary government debt market reached approximately $1.46 billion last week after a period of strong inflows during the second quarter, increasing demand for foreign currency and pushing the exchange rate higher.

The local gold premium continued to decline, falling to around EGP 60 per gram, down from approximately EGP 110 only a few days earlier. This reflects improved market supply and smoother trading conditions, helping to limit domestic price increases compared with previous periods when the gap between local and international prices was significantly wider. The decline also indicates easing market pressures seen over recent months.

The continued strength in demand for gold jewellery is consistent with recent statements by Egypt's Hallmarking Authority, which confirmed a noticeable increase in the volume of jewellery submitted for hallmarking. This reflects sustained activity in the domestic market, while proposals aimed at improving the hallmarking system and accelerating processing times remain under review.

The recovery in jewellery demand also signals a gradual shift in Egyptian consumer behaviour. After a prolonged period dominated by demand for gold bars and coins, part of consumer demand has begun returning to jewellery purchases as prices stabilize and the local premium declines. This development supports both manufacturing and retail activity while contributing to a healthier balance between jewellery demand and investment-oriented gold products.

The U.S. dollar has become the primary driver of gold prices in Egypt, exerting a greater influence than daily fluctuations in international gold prices. This explains why local prices have continued to rise despite relatively stable global trading, particularly as the local premium has narrowed and market supply has improved.

The lower premium also reflects improving market efficiency, with domestic prices increasingly tracking global gold prices and exchange-rate movements more closely than during periods marked by wide pricing distortions.

International gold markets are currently being influenced by two opposing forces. On one hand, geopolitical tensions and higher oil prices continue to support safe-haven demand for gold. On the other hand, expectations that the U.S. Federal Reserve will maintain a restrictive monetary policy continue to strengthen the U.S. dollar and push U.S. Treasury yields higher, limiting gold's upside potential.

Several global banks and financial institutions continue to maintain a positive medium- and long-term outlook for gold, supported by sustained central bank purchases and elevated geopolitical risks. However, short-term price movements are expected to remain closely linked to the U.S. dollar, Treasury yields, and interest-rate expectations.

Current market volatility does not necessarily indicate a change in gold's long-term trend. Instead, it reflects ongoing market repricing in response to evolving expectations for U.S. interest rates and the dollar, making short-term trading decisions increasingly sensitive to economic developments.

Consumers are advised to define the purpose of their purchase—whether for savings, investment, or jewellery—before making a buying decision. Choosing the appropriate gold purity, product weight, and making charge should be based on that objective rather than focusing solely on the price per gram, helping buyers maximize value both at purchase and upon resale.