Gold prices edged down slightly in local markets during Thursday's trading, while global spot prices remained stable. Investors are closely monitoring the summit between US President Donald Trump and his Chinese counterpart, Xi Jinping, in Beijing. This comes amid a continuing rally in the US Dollar and renewed inflationary pressures in the United States, bolstering market expectations for a US interest rate hike before the year's end, according to a report by Marsad AL Dahab for Economic Studies.
The Marsad AL Dahab report stated that gold prices dropped by approximately 10 EGP during today’s trading compared to yesterday's close. The price of 21-karat gold reached 6,960 EGP, while global spot gold remained steady at $4,690 per ounce, according to World Gold Council data at the time of reporting.
The report added:
24-karat gold: 7,954 EGP per gram.
18-karat gold: 5,966 EGP per gram.
Gold Coin (Gold Pound): 55,680 EGP.
The local market had recorded a 25 EGP decline on Wednesday, where 21-karat gold opened at 6,995 EGP and closed at 6,970 EGP. Globally, the ounce fell by $26 after opening at $4,716 and closing at $4,690.
Global Trends and Interest Rate Bets
On the global front, gold prices stabilized today after three consecutive days of losses. The metal has been pressured by a strong US Dollar and rising Treasury yields, as bets increase on a year-end rate hike. Additionally, gold faced profit-taking pressure after recently hitting a three-week high of $4,773.58 per ounce.
World markets are focused on the Beijing summit between Trump and Xi, anticipating discussions regarding the extension of the trade truce between the world's two largest economies. The summit also covers complex geopolitical issues, most notably developments regarding the Iranian conflict and the future of navigation in the Strait of Hormuz.
The report noted that uncertainty regarding the Iranian ceasefire, combined with high US bond yields following recent inflation data, has supported the Dollar as a safe haven. Reuters cited White House sources stating that Trump and Xi agreed on the necessity of reopening the Strait of Hormuz, though the issue of Taiwan was not addressed during the meeting.
Inflation and Monetary Policy
The US Dollar Index rose by over 0.1%, marking its fourth consecutive session of gains. Recent US inflation data showed that consumer prices in April rose at their fastest pace in three years, while producer prices saw their largest increase in four years.
According to the CME FedWatch Tool:
The probability of a rate hike in December rose to 31.8% (up from 16% a week ago).
The probability of holding rates steady in June stands at 99%.
Despite these pressures, investment flows into gold funds continued. Holdings in the SPDR Gold Trust rose by approximately 1.71 metric tons, reaching its highest level since late April at 1,039.99 tons.
Developments in the Indian Market
The report also highlighted the Indian market, where the gap between local and international gold prices widened to over $200 per ounce. This follows India's decision to hike import duties on gold and silver to 15% (up from 6%) to protect foreign exchange reserves and support the Rupee.
This move prompted Indian investors to sell for profit amid weak local demand. Dealers offered discounts as high as $207 per ounce over official prices, a massive jump from the $17 discount recorded just a day prior.
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