Gold Declines Amid Weakening Rate-Cut Expectations and Escalating Global Trade Tensions

Gold prices saw a slight decline during Tuesday’s trading session, pressured by a stronger U.S. dollar and waning expectations for imminent interest rate cuts by the Federal Reserve. This comes as concerns mount over the potential fallout from new trade escalation threats made by former U.S. President Donald Trump.

In the local Egyptian market, gold prices fell by around EGP 10 compared to Monday’s close. The price of 21-karat gold dropped to EGP 4,635 per gram, while the global ounce price declined by $12 to reach $3,325.

The price of 24-karat gold stood at EGP 5,297 per gram, 18-karat gold at EGP 3,973, and 14-karat gold at EGP 3,090. The price of a gold pound coin reached EGP 37,080.

Gold had recorded a EGP 5 gain during Monday’s trading, with 21-karat gold opening at EGP 4,640, dipping to $4,610 per ounce, and closing at EGP 4,645. Globally, the ounce opened at $3,337, dropped to $3,303, and rebounded to close at $3,337, indicating relative stability.

Local Liquidity Constraints and Selling Pressure Weigh on Prices

The local decline is attributed to a liquidity crunch in the Egyptian market, alongside increased resale activity by citizens seeking to capitalize on recent high prices or to generate cash for essential needs.

Gold remains one of the most liquid assets, widely accepted and easily sold without complicated procedures. This makes it a safe haven not only for inflation hedging, but also as a flexible savings tool that can be quickly converted into cash when needed. This explains why many households have opted to liquidate part of their gold savings to cope with rising living costs or to benefit from the price surge.

External Pressures Mount as Dollar Strengthens and Trump Revives Trade Rhetoric

External factors have also played a significant role in gold’s decline—chief among them the strengthening of the U.S. dollar and Trump’s renewed aggressive trade stance. Trump announced plans to impose a 10% tariff on imports from countries politically aligned with the BRICS bloc, setting August 1 as the implementation date.

Trump also threatened to impose additional tariffs on dozens of Asian and African countries, insisting there would be no exceptions for nations deemed to pursue “anti-American” policies.

Gold Faces Pressure from Interest Rates, Dollar Strength, and Inflation Fears

Expectations of rising inflation as a result of Trump’s proposed tariffs may prompt the Federal Reserve to maintain elevated interest rates for longer than previously anticipated, reducing the appeal of gold, which does not yield interest, and thereby applying additional downward pressure on prices.

Nevertheless, periods of dollar weakness helped curb some of gold’s losses, as the greenback struggled to attract buyers amid growing concerns over the U.S. fiscal outlook and uncertainty surrounding the economic consequences of Trump’s new trade policies. These factors have helped sustain gold’s status as a safe-haven asset.

Markets on Hold as FOMC Minutes Awaited

Global markets are now in wait-and-see mode, anticipating the release of the Federal Open Market Committee (FOMC) meeting minutes on Wednesday, hoping to gain clearer insight into the Fed’s monetary policy direction for the remainder of the year.

With no major U.S. economic data due on Tuesday, the Fed minutes are expected to be the main market catalyst, likely setting the tone for currency and commodity movements—especially gold.

The current market environment is characterized by a mix of conflicting factors. The U.S. dollar rose to a two-week high on Monday, intensifying early session pressure on gold, only to be counterbalanced later by rising geopolitical risks and growing risk aversion in equity markets, prompting some investors to return to gold as a hedge.

Cautious Outlook Amid Uncertainty

Gold remains susceptible to further volatility in the coming hours, especially if the upcoming Fed minutes point toward a continued hawkish stance on interest rates, which could renew pressure on prices.

Still, ongoing global concern over the implications of U.S. trade policy, alongside instability in financial markets, may offer temporary support to gold. As a result, the short-term outlook remains highly uncertain, with the potential for movement in either direction.