Dollar surge lifts gold by about EGP 300 despite weekend market closure

Gold prices in the local Egyptian market rose on Sunday, driven by the increase in the U.S. dollar exchange rate, despite the weekend closure of both the local market and the global bullion exchanges. The move comes amid escalating geopolitical tensions in the Middle East and the ongoing war between the United States and Israel on one side and Iran on the other, according to a report released by the iSagha platform.

Saeed Embabi, Executive Director of the platform, said that gold prices in the local market increased by around EGP 300 during Sunday’s trading, with 21-karat gold reaching EGP 7,550 per gram, despite the weekly closure of both the domestic market and international exchanges.

He added that 24-karat gold recorded about EGP 8,629 per gram, while 18-karat gold reached approximately EGP 6,472 per gram. The gold pound coin traded at around EGP 60,400.

Embabi noted that local gold prices had declined by 4% during the previous week, equivalent to nearly EGP 300. The price of 21-karat gold opened the week at EGP 7,525 and closed at EGP 7,225. Meanwhile, the global gold ounce fell by about 2%, or $107, opening the week at $5,279 and closing at $5,172.

He explained that the rise in local gold prices on Sunday came despite the weekend closure as a form of anticipatory pricing ahead of Monday’s trading session, particularly as some gold shops continue operating during the weekend and throughout the month of Ramadan.

Embabi pointed out that the increase in the dollar exchange rate in the local market coincides with the war between the United States and Israel and Iran entering its second week, with no clear signals of imminent negotiations or de-escalation.

He stressed that movements in the dollar exchange rate have a stronger impact on gold prices in the local market than changes in global gold prices. According to Embabi, a $10 increase in the global gold price typically raises the local gold price by about EGP 6 per gram, while a 10-piaster move in the dollar exchange rate can shift the local gold price by about EGP 11 per gram.

He added that although Egypt recently received $2.3 billion from the International Monetary Fund as part of a new tranche under the economic cooperation program, the inflow was not sufficient to offset the impact of the war or the outflows of hot money from the market.

Embabi also noted that continued military operations could increase pressure on the Egyptian economy due to declining foreign currency revenues, in addition to rising global oil and energy prices.

This comes amid foreign investor outflows from emerging markets as geopolitical tensions escalate in the region, particularly following the joint military operation launched by the United States and Israel against Iran and Iran’s retaliatory strikes targeting U.S. interests in the region.

Meanwhile, Prime Minister Mostafa Madbouly confirmed that the government has prepared a plan in coordination with the Central Bank to ensure the availability of foreign currency needed to secure essential imports, including food commodities, petroleum products, and production inputs.

According to a statement from the Cabinet, the negative impact of the military operations on global markets and international economic activity has been reflected in currency exchange rates worldwide due to the prevailing uncertainty in international markets.

The Egyptian pound had ended 2025 with strong performance, rising by 6.7% against the U.S. dollar during the year, supported by record inflows of remittances from Egyptians working abroad and improved liquidity in the banking sector.

Precious metal markets experienced sharp volatility during the past week following the shock and uncertainty caused by the joint U.S.-Israeli strikes on Iran. Gold prices surged at the beginning of the week to approach a record high near $5,420 per ounce before retreating as investors took profits and awaited further developments in the Middle East conflict.

Embabi said that markets typically react quickly to geopolitical shocks, but once the initial wave of concern subsides, investors tend to refocus on macroeconomic fundamentals.

Strong dollar pressures gold

He noted that despite escalating geopolitical tensions, gold has faced a major headwind from the strength of the U.S. dollar, alongside expectations that the Federal Reserve may keep interest rates unchanged or even raise them to combat inflation driven by rising energy prices.

Embabi explained that the increase in energy prices resulting from the conflict has heightened fears of renewed inflationary pressures, which could prompt central banks to maintain restrictive monetary policies for a longer period.

He believes gold has managed to retain much of its gains despite the strong dollar and expectations of tighter monetary policy, supported by continued demand from central banks.

He also emphasized that rising global government debt levels may limit central banks’ ability to maintain high interest rates for an extended period, as higher borrowing costs could place significant pressure on public finances.

As a result, central banks may eventually be forced to cut interest rates or intervene in bond markets to support economic stability, which could once again enhance gold’s attractiveness as a safe-haven asset.

For now, financial markets do not appear fully convinced that the geopolitical crisis will become prolonged. Some analysts expect the military escalation to remain relatively limited, allowing markets to stabilize gradually if tensions ease.

However, a prolonged conflict could reintroduce uncertainty into financial markets and increase demand for gold as a hedge against geopolitical and economic risks.

Many analysts believe that gold’s long-term outlook is tied to deeper structural shifts in the global economy, including rising geopolitical tensions and the growing use of economic policies as strategic tools between nations.

In this context, central banks around the world continue to diversify their reserves away from the U.S. dollar, with gold remaining one of the few highly liquid assets that is not directly exposed to political risk or counterparty risk.

U.S. labor market data for February delivered disappointing results, with the economy losing more than 92,000 jobs, weaker than expected, while the unemployment rate edged up slightly to 4.4%.

U.S. retail sales also declined by 0.2% month-on-month in January.

Following the release of these figures, traders increased their expectations for Federal Reserve rate cuts to about 43 basis points by the end of the year, up from 35 basis points the previous day.

Nevertheless, comments from Federal Reserve officials indicated differing views on the monetary policy path. Mary Daly, President of the Federal Reserve Bank of San Francisco, said the latest employment data was disappointing but still insufficient to justify an immediate rate cut.

The Federal Reserve is widely expected to keep interest rates unchanged at its upcoming meeting on March 17–18, while markets will focus on updates to the “dot plot” within the Summary of Economic Projections.