Gold Declines After Trump Softens Rhetoric on Trade War and Federal Reserve

Gold prices fell in local markets during trading on Wednesday, with a sharp decline in the ounce on the global stock exchange after hitting a record high. This decline was affected by price corrections and profit-taking following the US President's radical shift in his stance on China and the Federal Reserve.

Gold prices fell by EGP 90 during trading today, compared to yesterday's closing price. The price of 21-karat gold reached EGP 4,800 per gram, while the price of an ounce fell by $46 to $3,318.

Mbappe added that 24-karat gold reached EGP 5,486 per gram, 18-karat gold reached EGP 4,114 per gram, and the gold pound reached approximately EGP 38,400 per gram. Gold prices in local markets witnessed sharp fluctuations during trading yesterday, Tuesday. A gram of 21-karat gold opened at EGP 4,900, rose to EGP 5,000, and closed at EGP 4,890. Meanwhile, an ounce fell $43, opening at $3,424, touching $3,500, and closing at $3,381.

Gold prices in local markets experienced sharp fluctuations during trading yesterday, influenced by global market volatility. An ounce rose to an all-time high of $3,500, then declined due to profit-taking.

Markets saw heavy selling following US President Donald Trump's shift in his hawkish stance toward China and a de-escalation with Federal Reserve Chairman Jerome Powell. US President Donald Trump said on Tuesday that he has no intention of firing Federal Reserve Chairman Jerome Powell, but added that he would like to cut interest rates, comments that could ease tensions over the central bank chief's future that have worried investors.

Some viewed Trump's approach to the Fed's interest rate cuts as a threat to the central bank's independence, pushing the US dollar to its lowest level since 2022.

Meanwhile, US President Donald Trump indicated a possible de-escalation in his trade war with China, saying that high tariffs on Chinese goods "will come down significantly, but it won't go to zero."

He added that the US president's comments calmed markets and reduced uncertainty, but also increased bets on a US interest rate cut.

Central banks will continue to buy gold in an attempt to diversify their investments away from fiat currencies amid the current political and economic turmoil, according to statements made by billionaire hedge fund manager John Paulson to Reuters. On April 14, Goldman Sachs raised its year-end gold price forecast to $3,700 per ounce, up from its previous forecast of $3,300. The move cited stronger-than-expected central bank demand and rising recession risks, which have led to increased ETF inflows.

The investment bank announced that it expects central bank demand to average 80 tons per month, up from its previous forecast of 70 tons. It also noted a surge in ETF inflows driven by recession fears, with Goldman Sachs now estimating a 45% chance of a US recession within the next 12 months. If central bank purchases average 100 tons per month, Goldman Sachs estimates that gold could reach $3,810 per ounce by the end of 2025. As for exchange-traded funds (ETFs), in the event of an economic recession, ETF inflows could return to their pandemic levels, supporting prices toward $3,880 by the end of the year.

On April 7, Goldman Sachs analysts told investors that any decline in gold prices should be viewed as a buying opportunity, and that they continue to recommend long positions in the precious metal as "the most reliable value in the commodities market."

"We maintain our year-end gold price forecast of $3,300 per ounce, with a range of $3,250-$3,520, largely reflecting the risk of higher gold prices for investors," the Goldman Sachs analysts wrote in a note.