Gold Declines Ahead of Fed Minutes as Stronger U.S. Dollar Weighs on Prices

 Marsad Al Dahab reported that gold prices declined in both the Egyptian local market and the global bullion market during Tuesday's mid-session trading, pressured by a stronger U.S. dollar and rising U.S. Treasury yields, as investors await the release of the Federal Reserve's June meeting minutes for fresh clues on the future direction of monetary policy under the leadership of new Federal Reserve Chair Kevin Warsh.

According to Marsad Al Dahab for Economic Studies, the price of 21-karat gold fell by around EGP 40 during midday trading to approximately EGP 5,800 per gram, compared with Monday's close. Meanwhile, spot gold dropped by about $20 to trade near $4,145 per ounce.

The report added that 24-karat gold traded at approximately EGP 6,629 per gram, while 18-karat gold reached EGP 4,971 per gram. The price of the gold pound stood at around EGP 46,400.

Gold had already ended Monday's session lower, with 21-karat gold declining by EGP 30 from EGP 5,870 to EGP 5,840 per gram, while the international gold price slipped by $11 from $4,176 to $4,165 per ounce.

Marsad Al Dahab noted that global markets are currently undergoing a phase of rebalancing following the strong rally recorded last week after weaker-than-expected U.S. employment data. The rebound in the U.S. dollar, supported by higher Treasury yields, has reduced the appeal of gold as a non-yielding asset.

Investors are now focused on the Federal Reserve meeting minutes, which could reveal the extent of disagreement among policymakers regarding inflation, the labor market, and the timing of future interest-rate decisions. Current market pricing suggests nearly a 58% probability of a rate hike at the September meeting, making any less-hawkish tone from the Fed potentially supportive for gold prices in the coming period.

The report also noted that continued tensions around the Strait of Hormuz and rising oil prices have revived inflation concerns, pushing U.S. Treasury yields higher, strengthening the dollar, and weighing on gold. At the same time, these geopolitical developments continue to support safe-haven demand for the precious metal, limiting the pace of price declines.

Recent U.S. labor market data remains one of gold's key supportive factors after showing a clear slowdown in hiring, accompanied by downward revisions to previous months' figures. This prompted investors to reduce expectations for continued monetary tightening, benefiting gold through lower rate-hike expectations compared with levels seen before the data release.

Marsad Al Dahab added that gold remains in a price correction phase after losing more than a quarter of its value from the record highs reached earlier this year due to the strong U.S. dollar and tighter U.S. monetary policy. Nevertheless, the metal has managed to recover part of its recent losses as expectations for further rate hikes eased and investment demand improved.

Reflecting the rapid transformation of the global gold trade, Hong Kong has launched a centralized gold settlement system, resumed precious metals futures trading, and announced plans to expand its gold storage capacity to more than 2,000 tonnes by 2030. Authorities are also working on launching yuan-denominated gold contracts, aiming to strengthen Hong Kong's position as a global hub for gold trading and reserves amid growing competition with Singapore.

This development coincides with continued strength in Asian demand. China imported 162.6 tonnes of gold in May, up from 99.5 tonnes in May 2025, representing a 63% year-on-year increase. China's non-monetary gold imports reached 691.6 tonnes during the first five months of the year, compared with 393.6 tonnes during the same period last year, marking 76% growth, although still below the 840.6 tonnes recorded in 2024, underscoring the resilience of Chinese gold demand.

The report further noted that the People's Bank of China increased its gold reserves for the 20th consecutive month, reinforcing the ongoing strategy of central banks to diversify reserve assets and reduce dependence on the U.S. dollar.

Meanwhile, the World Gold Council's outlook report expects India's tighter restrictions on gold imports to reduce domestic gold demand by approximately 10% year-on-year, with jewelry, bar, and coin demand projected to decline by 50–60 tonnes annually as a result of higher import duties. While this may moderate part of global consumer demand, it is unlikely to alter the broader market trend given the continued strength of official-sector buying by central banks.

According to the World Gold Council's outlook for the second half of 2026, gold is expected to remain one of the assets most closely linked to economic and geopolitical developments. The report forecasts that central bank purchases will continue to exceed their historical average, providing structural support for gold prices over the medium and long term despite ongoing short-term volatility driven by interest-rate expectations and U.S. dollar movements.

Marsad Al Dahab also noted that major global financial institutions continue to view gold mining companies as attractively valued relative to the broader U.S. equity market, despite the substantial rise in gold prices over recent years. This reflects investors' continued confidence in gold as a long-term strategic asset.

The report concluded that gold's direction in the coming period will largely depend on the outcome of the Federal Reserve meeting minutes, movements in the U.S. dollar and Treasury yields, and geopolitical developments in the Middle East. Nevertheless, sustained central bank purchases and the continued expansion of Asia's gold trade are expected to provide solid underlying support, limiting any sharp declines in prices despite ongoing market volatility.