Global Weekly Gains Support Gold, Yet Domestic Prices Decline

Gold's domestic prices retreated on Saturday, despite strong weekly gains in the global market. This decline happened while the global stock exchange was closed for the weekly holiday. Gold's strong weekly performance, which saw a 2% gain, was driven by increased demand for safe-haven assets amidst rising global geopolitical tensions and growing expectations of a U.S. interest rate cut. This is according to a report from the "iSagha" platform for gold and jewelry trading.

Saeed Embaby, the executive director of "iSagha," stated that local gold prices dropped by about 10 EGP on Saturday compared to Friday's closing. The price for 21-carat gold reached 5,075 EGP per gram. Globally, the ounce price rose by about $75 over the past week, reaching $3,760.

Embaby explained that the price of 24-carat gold was 5,800 EGP per gram, 18-carat was 4,350 EGP, and 14-carat was 3,384 EGP. The price of a gold pound remained stable at 40,800 EGP.

He also noted that gold prices had risen by about 30 EGP on Friday. The 21-carat gold opened at 5,055 EGP, touched 5,100 EGP, and closed at 5,085 EGP. The global ounce price increased by about $14 on Friday, opening at $3,746 and closing at $3,760.

Gold Leads Historic Rally in Precious Metals

Global markets are witnessing a strong three-year rally in precious metals. Gold has led the charge, rising 43% since the beginning of the year, followed by silver at 55%, and platinum, which has surged 71%. All three have broken through historic price levels.

Analysts believe these increases are not a coincidence but reflect a "perfect storm" of macroeconomic factors. These include rising global sovereign debt, an anticipated weakening of the U.S. dollar as central banks move towards lowering interest rates, increased official demand for gold from central banks, and ongoing geopolitical tensions that drive investors to safe havens.

Rate Cut Expectations Support Gold

Gold prices have risen amid increasing expectations of a more accommodative U.S. monetary policy, despite signs of fragility in the labor market and a decline in consumer confidence. The core Personal Consumption Expenditures (PCE) inflation rate has stayed below 3%, reinforcing expectations that the Federal Reserve will extend its monetary easing measures until the end of the year.

This outlook was further supported by U.S. PCE data for August, which showed the core PCE index at 2.9% year-over-year, matching estimates. The headline index rose to 2.7% from 2.6% in July. Despite rising living costs, the continued decline in inflation bolsters investor bets on an interest rate cut.

However, recent data from the University of Michigan showed that consumer confidence in September fell to 55.1, below the expected 55.4. One-year inflation expectations dropped to 4.7%, while five-year expectations fell to 3.7%.

Fed Statements and Yield Movements

Federal Reserve officials have expressed concerns about the fragility of the labor market. Federal Reserve Governor Michelle Bowman stated that data shows a weakening in job growth and that inflation, excluding the effects of tariffs, is approaching the target.

Thomas Barkin, President of the Federal Reserve Bank of Richmond, noted that consumer spending remains relatively strong but cautioned against the new tariffs imposed by U.S. President Donald Trump on imported medicines and furniture.

U.S. Treasury yields are seeing a slight increase, with the 10-year yield rising to 4.187%. Real yields (after accounting for inflation) reached about 1.807%. The CME FedWatch Tool indicates that markets are pricing in an 88% probability of an interest rate cut in October and a 65% chance of another cut in December.

U.S. Government Shutdown Concerns Boost Gold Demand

Demand for gold is growing due to increasing fears of another U.S. government shutdown as a funding agreement has not yet been reached in Congress before September 30. Even if an agreement is reached, rising U.S. debt continues to weaken confidence in the dollar and increase gold's appeal as a safe, alternative monetary asset.

Record Inflows into Gold-Backed ETFs

The SPDR Gold Shares (GLD), the world's largest gold-backed ETF, experienced its largest single-day inflow in its history last week, with over 18 tons added. This reflects a strong return of investment demand.

Despite this, global ETF holdings remain well below their record levels from 2020. Analysts confirm that while the market may be in a state of overbuying, it is not yet overvalued due to continued strong demand from central banks. The People's Bank of China, in particular, is estimated to have been buying about 33 tons of gold per month since 2022, a pace that could continue for another eight years to build reserves comparable to those of developed countries.

Silver and Platinum Continue Historic Rise

Gold was not the only metal to benefit; silver rose to a 14-year high, surpassing $46 per ounce with a more than 7% increase last week. Sprott analysts suggest that rising industrial demand and declining supply could put silver on a trajectory similar to palladium, which rose more than 500% between 2016 and 2021. Meanwhile, platinum continued its gains, supported by rising industrial demand and shrinking supply from South Africa, with a 71% surge since the beginning of the year.

Upcoming Economic Data Next Week

Next week, investors will be watching several important U.S. data releases, including a series of statements from Federal Reserve officials, the ADP National Employment Report, the ISM Manufacturing PMI, initial jobless claims, and the September non-farm payrolls report.

This data will be crucial for confirming the path of U.S. monetary policy and determining whether the Fed will continue its easing measures in the last quarter of the year, which will directly impact the trends in gold and other precious metals prices.