Gold Benefits from Weak Dollar and Renewed Safe-Haven Demand Amid Tariff Fears and Monetary Easing Expectations

Gold prices recorded a significant increase in both local and global markets during Monday’s trading session, supported by the weakening of the US dollar and renewed demand for safe-haven assets amid ongoing uncertainty over US trade and monetary policies.

Domestically, gold prices rose by approximately EGP 5, with the 21-karat gram reaching EGP 4,655. Globally, the ounce climbed by $17 to settle around $3,567.

The 24-karat gram recorded EGP 5,320, the 18-karat stood at EGP 3,990, and the 14-karat at EGP 3,104. Meanwhile, the gold pound was priced at EGP 37,240.

Gold had ended last week’s trading with a slight decline of EGP 10, with the 21-karat gram opening at EGP 4,660 and closing at EGP 4,650, while the global ounce dropped by 0.1%, from $3,355 to $3,350.

Several factors boosted gold at the start of the week, most notably the US dollar index retreating from monthly highs following dovish comments by Federal Reserve Board member Christopher Waller last week, which strengthened expectations for a rate cut in September.

Additional support came from renewed trade threats by former President Donald Trump, who proposed imposing tariffs of up to 20% on imports from the European Union starting August 1, prompting investors to seek refuge in gold as a safe haven amid fears of economic fallout.

Despite these supportive conditions, investors remained cautious about making strong bullish bets, especially amid rising expectations that the Federal Reserve may delay any rate cut, given signals that tariffs could impact consumer prices. This would provide additional support for the dollar and limit gains in non-yielding assets like gold.

Markets currently anticipate two rate cuts of 25 basis points each before the end of the year. However, comments by Fed Chair Jerome Powell regarding the potential inflationary impact of new tariffs have added more uncertainty to the monetary policy outlook, diminishing gold's appeal as an inflation hedge in a high-yield environment.

The University of Michigan's Consumer Sentiment Index rose to 61.8 in July, reflecting growing optimism about current and future economic conditions, which in turn lent support to the dollar and limited gold’s upside.

Nevertheless, declining long-term inflation expectations—from 4% to 3.6%—and short-term forecasts—from 5% to 4.4%—grant the Fed more flexibility in managing policy without rushing to cut rates, providing a counterbalance in the broader outlook.

Markets this week are closely watching several key economic indicators that may shape the direction of global markets. These include a speech by Fed Chair Jerome Powell in Washington on Tuesday, existing home sales data on Wednesday, the European Central Bank’s interest rate decision, weekly US jobless claims, PMI data, and new home sales on Thursday, as well as durable goods orders—a leading indicator of corporate investment—on Friday.

Despite supportive monetary and geopolitical conditions, gold remains range-bound and lacks strong momentum to break through key resistance levels. The market’s direction in the short to medium term remains contingent on developments in US monetary policy, global trade tensions, and economic growth data.