Gold prices in Egypt’s local market remained relatively stable during Tuesday’s trading session, despite a slight decline in global ounce prices, as the U.S. dollar strengthened on rising inflation expectations and ongoing geopolitical tensions in the Middle East, according to a report issued by the Gold Observatory for Economic Studies.
The report noted that 21-karat gold traded at around EGP 7,000, maintaining the same level as Monday’s close, while the global ounce price fell by nearly $30 to $4,706, according to World Gold Council data at the time of publication.
Meanwhile, 24-karat gold recorded approximately EGP 8,000 per gram, 18-karat gold stood near EGP 6,000, and the gold pound coin stabilized around EGP 56,000.
According to the report, the local gold market had posted modest gains on Monday, with 21-karat gold opening at EGP 7,005 per gram, touching EGP 7,020 before closing again at EGP 7,000. Globally, the gold ounce rose from $4,716 to $4,736.
The report explained that global markets are currently being driven by two major factors: escalating geopolitical tensions in the Middle East and investor anticipation of upcoming U.S. inflation data, which remains one of the key indicators shaping Federal Reserve monetary policy decisions.
“Today’s rise in the dollar is not only supported by inflation expectations, but also by geopolitical deadlock in the Middle East, amid reports that U.S. President Donald Trump is considering resuming hostilities against Iran following the rejection of the latest peace proposal,” the report stated.
Egypt’s foreign exchange market also came under renewed pressure, as the U.S. dollar climbed above EGP 53 once again across most Egyptian banks during Tuesday’s trading.
The Egyptian pound failed to sustain the recovery momentum seen last week, which briefly pushed the dollar closer to the EGP 52 level, before the U.S. currency resumed its upward trajectory amid growing global uncertainty. This, in turn, supported local gold prices as investors sought safe-haven assets during heightened economic volatility.
The report added that gold continued trading near the $4,700 level amid investor caution ahead of the release of the U.S. Consumer Price Index (CPI), which could significantly influence the outlook for Federal Reserve policy.
It also highlighted that rising tensions in the Middle East boosted demand for the U.S. dollar as a safe-haven currency, while higher oil prices fueled concerns over another wave of global inflation, potentially forcing central banks, particularly the Federal Reserve, to maintain elevated interest rates for a longer period.
Higher oil prices resulting from geopolitical instability are also creating additional pressure on gold, as they strengthen the dollar and increase the opportunity cost of holding non-yielding assets such as bullion.
President Donald Trump stated on Monday that prospects for a ceasefire with Iran were deteriorating amid continued disagreements over Tehran’s nuclear program and tensions surrounding the Strait of Hormuz. U.S. media reports also indicated growing frustration within the administration over stalled negotiations, alongside increasing discussion of a possible return to military operations.
At the same time, markets continue to price in the possibility of prolonged monetary tightening in the United States, with investors estimating roughly a 25% chance of another Federal Reserve rate hike before year-end, driven by concerns over inflationary pressures linked to rising energy prices.
In a related development, markets are closely watching upcoming U.S. inflation figures, with annual CPI expected to rise to 3.7%, while core inflation is forecast at 2.7%. Persistent inflation could increase pressure on the Federal Reserve to keep interest rates higher for longer, potentially weighing on gold prices in the short term.
The report also addressed the impact of Indian Prime Minister Narendra Modi’s call for citizens to reduce gold purchases for one year in order to protect foreign currency reserves. The announcement raised fears of additional restrictions or tariffs on gold imports, sending shares of Indian jewelry companies lower.
The report noted that higher oil prices linked to the conflict with Iran are placing significant pressure on India’s balance of payments, given that the country is among the world’s largest importers of both oil and gold.
Despite current pressures, the report emphasized that the long-term outlook for gold remains positive, supported by continued central bank purchases and sustained investment demand for the precious metal.
According to World Gold Council data, total global gold demand rose 2% year-on-year to 1,230 metric tons during the first quarter of the year. Central banks purchased around 243 tons of gold, while jewelry demand fell to 335 tons due to elevated prices.
Gold-backed exchange-traded funds (ETFs) also recorded strong inflows in April, attracting approximately 45 tons of gold valued at $6.575 billion, pushing total global holdings to 4,137 tons — the third-highest level on record. European funds led investment inflows amid mounting geopolitical and inflation concerns.
The report added that Asian gold funds continued to attract inflows for the eighth consecutive month, led by China and Hong Kong, as rising global tensions and weak returns on other investment instruments reinforced gold’s appeal as a safe-haven asset.
The report concluded that markets are expected to remain highly sensitive to developments in the Middle East conflict, U.S. inflation data, Federal Reserve policy signals, and oil price movements, all of which are likely to remain the key drivers of gold prices in the coming period.
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