Gold Benefits from Rate Cut Bets and Rising Geopolitical Risks

Gold prices in local markets saw a significant rise during trading today, Thursday. According to a report from the "iSagha" platform for gold and jewelry trading, the increase was supported by a growing demand for safe-haven assets, rising expectations for U.S. interest rate cuts, and ongoing global geopolitical tensions.

Saeed Embaby, CEO of the iSagha platform, stated that gold prices in the local market rose by approximately 30 EGP today compared to the end of yesterday's trading. The price of a gram of 21-carat gold reached 5,060 EGP. Globally, the price of an ounce increased by about $16, reaching $3,752.

Embassy further explained that a gram of 24-carat gold was priced at 5,783 EGP, while 18-carat gold reached 4,337 EGP. The price of 14-carat gold stood at 3,374 EGP, and the price of the gold pound remained stable at 40,480 EGP.

He added that gold prices had fallen by about 30 EGP during trading yesterday, Wednesday. A gram of 21-carat gold opened at 5,070 EGP and closed at 5,030 EGP. Concurrently, the price of an ounce on the global exchange fell by about $29, opening at $3,765 and closing at $3,736.

Federal Reserve and Dollar Pressure

Experts believe that the U.S. Federal Reserve's cautious stance helps solidify the dollar's strength, which limits gold's momentum toward new record highs. Markets are awaiting tomorrow's U.S. personal consumption expenditures data, along with speeches from Federal Reserve officials, to determine the next phase of monetary policy.

This week, Federal Reserve Chairman Jerome Powell reaffirmed that interest rate decisions would remain "data-dependent." He warned that excessive easing could hinder the achievement of the inflation target. Despite this, traders expect the U.S. central bank to implement new rate cuts in October and December, having already cut rates by 25 basis points earlier this month.

Divergence Within the Fed

Statements from Federal Reserve officials have carried conflicting signals. Michelle Bowman warned against delaying job support if rates are not cut quickly. Meanwhile, Chicago Fed President Austan Goolsbee believes there is room for further cuts if inflation continues to decline. In contrast, Atlanta Fed President Raphael Bostic warned that inflationary pressures persist, confirming that inflation risks remain.

Geopolitical Tensions Support Gold

In addition to economic factors, political developments have played a significant role in supporting the yellow metal. U.S. President Donald Trump has escalated his rhetoric against Russia, calling on NATO countries to shoot down Russian aircraft if they violate their airspace and asserting that Ukraine can reclaim its territories with Western support.

In response, the Kremlin stated that Russia would continue its military operations. Tensions in the Middle East have also increased, with the Houthis claiming responsibility for a drone attack on the Israeli city of Eilat. These events have kept geopolitical risks at the forefront, boosting gold's appeal as a safe haven.

The Specter of a Government Shutdown

In addition to these international tensions, the U.S. economy faces internal political risks. There is growing concern about a potential government shutdown in early October if Congress fails to pass a new spending bill. This scenario increases market uncertainty and boosts demand for gold as a safe asset.

Market Focuses on U.S. Data

In a related context, markets are anticipating the release of several key indicators today, including weekly initial jobless claims, the second estimate of U.S. annualized Q2 GDP, and durable goods orders, ahead of Friday's release of the core Personal Consumption Expenditures (PCE) price index.