Economic Uncertainty ,Expectations of Interest Rate Cuts Boost Gold's Strength

Gold prices rose in local markets during trading on Thursday, with the ounce on the global stock exchange nearing its all-time high. This was supported by increased demand for safe havens due to uncertainty surrounding expectations of a Federal Reserve rate cut and a weaker yuan.

Gold prices rose in local markets by about EGP 20 during today's trading compared to yesterday's closing price. The price of 21-karat gold reached EGP 4,485 per gram, while the price of an ounce rose by about $41 to $3,124.

The price of 24-karat gold reached EGP 5,026 per gram, the price of 18-karat gold reached EGP 3,844 per gram, and the price of 14-karat gold reached EGP 2,990 per gram, while the price of the gold pound reached EGP 35,880 per gram. According to the daily report of the "iSaaga" platform, gold prices rose in local markets by about 115 Egyptian pounds during trading on Wednesday. The price of a gram of 21-karat gold opened at 4,350 Egyptian pounds and closed at 4,465 Egyptian pounds. Meanwhile, the price of an ounce rose on the global stock exchange by about $101, opening at $2,982 and closing at $3,083.

Gold prices rose on the global stock exchange amid increased investor demand to hedge against global market turmoil. This rise came despite President Donald Trump's decision to suspend global import tariffs for 90 days.

However, tensions remain. The US's 125% tariff on Chinese goods, along with a 10% basic tariff on other major trading partners, has renewed fears of a slowdown in global growth.

The decision came in response to China's plans to impose an 84% tariff on all US imports, which will take effect on Thursday. The escalating trade war between the world's two largest economies will further escalate market turmoil and trigger a potential global economic downturn.

Silver prices rose to $31.26 per ounce during today's trading, driven by inflation concerns and its dual role as a hedge and an industrial commodity. The metal continues to benefit from rising inflation expectations and global economic uncertainty, attracting investors looking to diversify their investments.

Meanwhile, China devalued the official yuan exchange rate for the sixth consecutive day, reaching a 19-month low against the dollar on Thursday. The People's Bank of China set the official rate at which the yuan is allowed to trade within a 2% band, at 7.2092 to the dollar, its weakest since September 11, 2023, according to Reuters.

China is steering its currency, the yuan, toward weakness at a carefully coordinated pace as the central bank seeks to mitigate some of the economic impact of the trade war without destabilizing financial markets. Beijing appears likely to use the country's currency as a negotiating tool, as it did in the recent trade war.

China's devaluation of its currency to multi-year lows reinforces gold's role as a hedge against currency risk. Central banks continue to increase their gold purchases, and exchange-traded fund inflows are expected to increase if gold continues its current bull run.

Federal Reserve meeting minutes showed that policymakers were nearly unanimous at their meeting last month that the US economy faces risks of slowing growth and accelerating inflation simultaneously.

Nearly all Fed policymakers see "risks to inflation skewed to the upside, while risks to employment skewed to the downside," according to the minutes of the March 18-19 Federal Open Market Committee meeting.

In a related development, markets are awaiting the release of US consumer price index data on Thursday and US producer price index data on Friday to determine the Fed's monetary policy direction for the coming period.