Fed Signals Rattle Markets as Gold Struggles to Hold Ground

Gold prices in local markets saw a slight increase of EGP 15 on Thursday, supported by escalating geopolitical tensions and ongoing economic uncertainty, despite the relative stability of global ounce prices on the international exchange.

The price of 21-karat gold rose to EGP 4,805 per gram, compared to EGP 4,790 at the close of Wednesday’s session. Meanwhile, the global ounce price edged down by just one dollar, settling at $3,373.

In other karat levels, 24-karat gold recorded EGP 5,491 per gram, 18-karat stood at EGP 4,119, and 14-karat at EGP 3,204. The price of the gold pound increased to EGP 38,440.

This comes after a decline in local gold prices on Wednesday, when 21-karat gold dropped by EGP 20, opening at EGP 4,810 and closing at EGP 4,790. Globally, the ounce price declined by $13 during the same session—from $3,385 to $3,372.

Today’s modest rise in local prices was driven by the continued stability of the global ounce price below the $3,400 mark, influenced by heightened geopolitical tensions—particularly in the Middle East—and persistent concerns over global trade outlooks.

The U.S. Federal Reserve’s decision to maintain interest rates unchanged has acted as a cap on gold’s upward movement. However, the ongoing geopolitical risks continue to support gold demand in the medium term, as investors increasingly turn to the metal as a safe haven.

Markets remain on edge following reports of a potential U.S. military strike on Tehran amid growing confrontations with Israel—factors that are reinforcing investment demand for gold in this volatile climate.

On Wednesday, the Federal Reserve left interest rates unchanged for the fourth consecutive meeting, holding them in a range of 4.25% to 4.50%. At the same time, it revised its outlook for the next two years, indicating fewer expected rate cuts. Notably, seven out of 19 Fed officials now forecast no rate reductions in 2025.

In his post-meeting remarks, Fed Chair Jerome Powell stated that the U.S. economy remains strong and resilient. He noted that inflation indicators are nearing target levels, while the labor market continues to perform well, with unemployment rates hovering near historic lows.

The Fed also warned of further inflationary pressures stemming from U.S. trade policies—particularly under President Donald Trump’s direction—citing raised inflation targets to 3.6% and 3.4% for 2026 and 2027, respectively.

Despite the inflationary backdrop which typically favors gold, the Fed’s continued hawkish stance and prolonged high interest rate policy pose a significant headwind that could limit gold’s future gains.