Geopolitical tensions and expectations of US rate cuts push gold toward $4,500

Gold prices surged in local and global markets on Tuesday, with the ounce reaching an all-time high, driven by escalating geopolitical tensions and growing expectations that the US Federal Reserve will lower interest rates, according to a report by the Ai Sagha platform.

Saeed Embabi, the platform’s CEO, said that domestic gold prices jumped by around 85 EGP, bringing the 21-carat gold gram to 5,985 EGP, while the global ounce rose by about $45, reaching $4,493—its highest historical level. He added that the 24-carat gram hit 6,840 EGP, 18-carat 5,130 EGP, and the gold pound reached 47,880 EGP.

The report noted that gold opened Tuesday’s trading with record gains, approaching $4,500 per ounce, with expectations of nearly 70% annual gains in 2025 amid rising geopolitical risks and economic uncertainty, strengthening its appeal as a safe-haven asset.

Expectations of US rate cuts next year also supported gold, as lower interest rates reduce the opportunity cost of holding a non-yielding asset. Market forecasts suggest several rate cuts may occur in 2026 due to slowing inflation and labor market growth.

Investors are awaiting the preliminary US GDP reading for Q3 later today, expected to show 3.2% annual growth compared to 3.8% in Q2. Stronger-than-expected data could temporarily support the dollar, potentially pressuring dollar-denominated commodity prices in the short term, alongside reports on durable goods, industrial production, and ADP weekly employment data.

On the political front, Reuters reported that US President Donald Trump indicated the United States might retain recently seized oil off Venezuela’s coast while keeping the confiscated vessels. Meanwhile, BBC noted that Russia intensified airstrikes on the Odesa region in southern Ukraine, causing widespread power outages and threatening maritime infrastructure.

On the monetary side, Federal Reserve Governor Stephen Miran stated he may remain in office until the Senate confirms a new Fed chair, expected to be appointed before Jerome Powell’s term ends in May. CME FedWatch shows the probability of a rate cut in the January meeting is under 20%.

The report highlighted that tariff uncertainty, alongside strong demand from ETFs and central banks, pushed gold above $4,000 per ounce in 2025. With new sources of demand, including major Chinese insurance companies and the crypto community, JP Morgan expects gold could reach $5,055 per ounce by the end of 2026.

Natasha Kaneva, JP Morgan’s Global Commodities Strategy Head, said the current rally may experience volatility but reflects a long-term trend driven by official reserve diversification and increased individual investment in gold, with prices expected to approach $5,000 per ounce by the end of 2026.

Gregory Scherrer, Head of Base and Precious Metals Strategy at JP Morgan, added that total investor and central bank demand reached about 980 tons in Q3 2025, over 50% higher than the average of the previous four quarters, equivalent to quarterly flows of nearly $109 billion.

JP Morgan expects demand strength to continue in 2026, with average quarterly demand of around 585 tons, distributed among central banks, bullion and coin demand, and ETFs. The bank noted that every 100-ton increase above 350 tons in quarterly demand could raise gold prices by approximately 2% per quarter.

The report also projected that central bank purchases would remain high, though slightly below the peaks of past years, with total global central bank gold holdings at about 36,200 tons, roughly 20% of official reserves by the end of 2024.

Regarding investors, the bank expects about 250 tons to flow into ETFs in 2026, with bullion and coin demand exceeding 1,200 tons annually. Scherrer noted that gold’s share of total investor assets could rise to 4–5% in the coming years, supported by a deeper structural shift toward portfolio diversification.

JP Morgan concluded that limited mine supply flexibility, combined with strong demand, may accelerate gold to new record levels, with an average price of $5,055 per ounce in Q4 2026 and potential to reach around $5,400 by the end of 2027.