Gold declines locally and globally amid geopolitical uncertainty and interest rate expectations

According to a report issued by the iSagha platform, gold prices declined in the local market and the global exchange during mid-day trading on Tuesday, as markets continue to assess geopolitical developments in the Middle East amid conflicting signals from the United States and Iran regarding potential negotiations.

Engineer Saeed Embabi, CEO of the iSagha platform, said that gold prices fell by about 130 Egyptian pounds compared to yesterday’s closing prices, with 21-karat gold recording 6,770 pounds per gram. Meanwhile, the global ounce stabilized at $4,408 after touching $4,320 during Asian trading.

He added that 24-karat gold recorded around 7,737 pounds per gram, 18-karat gold reached about 5,803 pounds per gram, and the gold pound coin recorded 54,160 pounds.

Embabi noted that the gap between the global and local gold price reached 300 pounds in today’s trading, explaining that this gap acts as a hedge amid sharp volatility in the local market due to violent movements in global markets and exchange rate fluctuations.

Globally, gold remained under pressure on Tuesday after struggling to build on the previous day’s rebound, as investors continued to evaluate geopolitical developments in the Middle East amid mixed signals from the United States and Iran regarding possible negotiations.

On Monday, U.S. President Donald Trump postponed planned military strikes on Iranian energy infrastructure for five days, citing constructive discussions between the United States and Iran. This move improved overall market sentiment, raised hopes for a near resolution, and helped gold stage a strong rebound from its yearly low near $4,098 per ounce.

However, the rebound lacked strong buying momentum after Iranian officials denied that any negotiations were taking place, leaving investors cautious about the possibility of a prolonged conflict.

Traders also digested preliminary U.S. PMI data, which showed a slowdown in business activity in March, with the S&P Global composite PMI falling to 51.4 from 51.9, marking an 11-month low.

The services sector was the main driver of the slowdown, with its PMI falling to 51.1 from 51.7, also an 11-month low, while the manufacturing sector showed relative resilience, rising to 52.4 from 51.6.

Inflation driven by rising oil prices and expectations of higher interest rates continues to weigh on safe-haven demand. With the ongoing conflict in the Middle East and the Strait of Hormuz effectively closed, gold price movements are expected to remain driven by inflation risks stemming from higher oil prices and the resulting expectations that global interest rates will remain higher for longer, which pressures gold’s appeal as a safe haven.

Markets have largely ruled out Federal Reserve interest rate cuts this year and now expect the central bank to keep rates unchanged until 2026. This situation represents a major challenge for gold, as although the metal is traditionally seen as an inflation hedge, the sharp rise in its price has pushed U.S. Treasury yields higher and strengthened the U.S. dollar, negatively affecting the non-yielding asset.

At the same time, since both oil and gold are priced in U.S. dollars, higher crude oil prices indirectly boost demand for the dollar, adding further pressure on gold.

Meanwhile, traders are increasing liquidity by selling assets broadly, as seen in the continued pressure on global equity markets since the conflict escalated, with gold also being sold to meet margin calls, reduce risk, and preserve capital amid rising volatility.