Gold Achieves Strong Weekly Gains as Ounce Rises 2.2% Supported by Central Bank Buying and Global Tensions

Gold prices witnessed a slight decline in local markets during Saturday's trading, coinciding with the global stock exchange weekend. This follows a robust week where the gold ounce achieved gains exceeding 2.2%, supported by a retreating US Dollar and diminishing concerns regarding inflation and monetary tightening. Additionally, investor optimism grew regarding a potential agreement between the United States and Iran, according to a report from Marsad Al Dahab for Economic Studies.

The director of the Marsad Al Dahab stated that local gold prices dropped by approximately 5 EGP compared to yesterday's close. The 21-karat gold gram reached 7,020 EGP, while the gold ounce in the global market secured weekly gains of about $102, closing at $4,716, according to World Gold Council data as of the time of reporting.

The report added that the 24-karat gold gram was recorded at 8,023 EGP, while the 18-karat reached 6,017 EGP, and the gold coin (Gold Pound) reached 56,160 EGP.

Economic Drivers and the Labor Market

Precious metals benefited from recent US economic data showing an improvement in the labor market and stable unemployment rates, alongside a decline in consumer confidence and inflation expectations. This bolstered gold's ability to maintain its position above the $4,700 per ounce level.

The US economy added approximately 115,000 jobs during April, with the unemployment rate steadying at 4.3%. Meanwhile, the preliminary Consumer Confidence Index for May fell to 48.2 points, down from 49.8 in April, with a decrease in both short- and long-term inflation expectations.

Geopolitical Tensions and Energy Risks

On the geopolitical front, the report noted ongoing tension in the Gulf region. Despite a nominal ceasefire between the US and Iran, military movements and pressures related to navigation and energy in the Strait of Hormuz have kept the risk premium high in global energy markets.

Disruptions to oil tanker movements and rising costs for rerouting supplies—particularly for Asian importers—have fueled market anxiety. Crude oil prices remained stable with WTI near $95.42 per barrel and Brent at approximately $101.29, while the US Dollar Index retreated and the 10-year Treasury yield stabilized near 4.4%.

Global Investment Trends

Investors in India continued to strengthen their gold holdings via ETFs, with Indian gold funds recording positive inflows for the 11th consecutive month in April. Net inflows reached $297.2 million, a 68% increase compared to March.

Globally, gold-backed ETFs saw total inflows of $6.6 billion in April, led by the UK, the US, and Hong Kong, reflecting a renewed investment interest in gold as a safe haven.

Central Banks: The Strategic Pillar

Central banks remain a primary long-term support factor for the gold market. While net sales of 30 tons were recorded in March (largely due to Turkey and Russia), several countries, including China, Poland, Uzbekistan, and Kazakhstan, continued to bolster their reserves.

China: The People’s Bank of China raised its official gold reserves for the 18th consecutive month, purchasing 8 tons in March—the fastest monthly pace since December 2024.

New Players: Countries like Kosovo have entered the market, adding gold to their reserves for the first time.

The report concluded that gold still represents only about 15% of total global official reserves, leaving significant room for further asset reallocation toward the precious metal in the coming years. Central bank buying has become less price-sensitive, focusing instead on long-term strategic positioning, which provides a strong support floor for the market during correction periods.