Gold prices have risen in both local and global markets, driven by a decline in the US dollar, hints from the Federal Reserve about continued monetary easing, and rising geopolitical tensions worldwide, according to a report from "iSagha," an online platform for trading gold and jewelry.
Saeed Embaby, the Executive Director of iSagha, stated that gold prices in the local market increased by approximately EGP 20 today compared to yesterday's closing, with the price of 21-karat gold reaching EGP 4,940 per gram. Globally, the price per ounce rose by about $9 to reach $3,669.
Embaby added that the price of 24-karat gold reached EGP 5,646 per gram, while 18-karat gold was EGP 4,234, and 14-karat gold was EGP 3,294. The gold pound remained stable at EGP 39,520.
The report noted that gold prices had dropped yesterday, Wednesday, by about EGP 30. The 21-karat gold gram opened at EGP 4,950, touched EGP 4,970, and then closed the day at EGP 4,920. The global ounce had fallen by about $30, starting at $3,690, reaching $3,707, and then closing at $3,660.
Reasons for Today's Rise
Today's gold price increase was driven by several interconnected factors, primarily:
A weaker US dollar following the Fed's decision to cut interest rates, which made gold relatively cheaper for buyers outside the United States, leading to increased demand.
Expectations of further rate cuts this year. Statements by Fed Chairman Jerome Powell and economic indicators strongly suggest a high probability of additional reductions. This enhances gold's appeal as a non-yielding asset that benefits from a low-interest-rate environment.
A decline in US Treasury yields, especially the 10-year yield, after the decision was announced. This lowered the opportunity cost of holding gold and led to a new inflow of liquidity.
Market Movements Following the Fed's Decision
Gold prices experienced sharp volatility immediately after the US Fed announced a 25 basis point interest rate cut, the first reduction since last December, setting the overnight federal funds rate between 4.00% and 4.25%.
Immediately after the decision, the ounce price jumped to touch $3,707, its highest level ever. However, it retreated after Jerome Powell's press conference, where he adopted a cautious tone regarding future quantitative easing. This temporarily pushed the dollar higher and caused gold to fall by the end of yesterday's trading.
In its statement, the Fed indicated the need for two additional rate cuts this year, citing signs of a weakening labor market. The pace of job creation has slowed, and the unemployment rate has gradually risen, although it remains relatively low. Inflation is still above the target level.
Powell described the cut as a "risk management measure" in response to the weak labor market, emphasizing that the central bank would make its decisions "meeting by meeting" based on incoming data.
Updated Fed Economic Projections
The Fed also released its updated economic forecasts, which showed:
The US economy is projected to grow by 1.6% in 2025, 1.8% in 2026, and 1.9% in 2027.
The core Personal Consumption Expenditures (PCE) inflation rate is expected to remain at 3.1% this year and 2.6% next year, with long-term stabilization at the 2% target by 2028.
Positions of Banks and Financial Institutions
ANZ Bank expects gold to outperform at the start of the monetary easing cycle, noting that rising geopolitical tensions will support demand for gold as a safe haven.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, announced a 0.44% decrease in its holdings to 975.66 tons on Wednesday, down from 979.95 tons on Tuesday.
Impact of Geopolitical Tensions
Geopolitical risks are playing a prominent role in boosting gold's appeal.
In Ukraine, the Russian Ministry of Defense announced the advance of its forces on various fronts within the military operation.
In Europe, German Chancellor Friedrich Merz warned of Russian violations of NATO and EU airspace, while Ursula von der Leyen called for accelerating the halt of Russian gas and oil imports.
In the Middle East, the Israeli army continues its violent assault on the Gaza Strip for the 23rd day of the 23rd month of the war, amid widespread international condemnation. The European Union is considering imposing new sanctions and customs duties on Israel.
Markets are now awaiting the release of weekly US jobless claims data today, along with the Philadelphia Fed Manufacturing Index. These indicators are expected to provide a clearer picture of the Fed's future monetary policy direction and, consequently, the future of gold.
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