Gold prices fell in both local and global markets on Wednesday, pressured by a stronger U.S. dollar and escalating political tensions in the United States after President Donald Trump’s unexpected decision to dismiss Federal Reserve Governor Lisa Cook — a move that has reignited debate over the central bank’s independence.
Local and Global Prices
In the local market, gold prices dropped by about EGP 5 compared to Tuesday’s close, with 21-carat gold falling to EGP 4,600 per gram. Globally, spot gold declined by $15, settling at $3,376 per ounce.
Other local benchmarks showed: 24-carat gold at EGP 5,257, 18-carat gold at EGP 3,943, 14-carat gold at EGP 3,067, while the gold pound coin stood at EGP 36,800.
On Tuesday, gold prices had risen by around EGP 30 per gram, with 21-carat gold opening at EGP 4,575 and closing at EGP 4,605, while the ounce climbed $26, from $3,365 to $3,391.
Political Turmoil and Policy Speculation
Trump announced Cook’s dismissal over alleged irregularities related to mortgage loans — an unprecedented move seen as undermining the Fed’s independence. Cook has stated she intends to challenge the decision in court. Trump, while pledging to abide by any ruling, appeared unconcerned about the legal challenge.
These developments have fueled speculation that the Federal Reserve may face increased pressure to implement deeper rate cuts, as Trump continues to push aggressively for lower borrowing costs.
Fed Outlook and Market Expectations
Fed Chair Jerome Powell signaled last week that an interest rate cut could be on the table at the September meeting, citing mounting risks in the labor market.
According to the CME FedWatch Tool, traders now see a greater than 87% probability of at least a 25-basis-point cut, up from 84% just a day earlier.
Consumer Confidence and Inflation Trends
The Conference Board reported that U.S. consumer confidence fell to 97.4 in August, down from a revised 98.7 in July. While the decline was modest, sub-indices reflected underlying weakness:
The Current Situation Index fell 1.6 points to 131.2.
The Expectations Index dropped 1.2 points to 74.8, remaining below the threshold of 80 — typically a signal of an approaching recession.
“Consumer confidence dipped slightly in August but remains within the range of the past three months,” said Stephanie Guichard, Chief Economist at the Conference Board.
Meanwhile, inflation expectations rose to 6.2% in August, up from 5.7% in July, signaling added pressure on households.
Durable Goods and Upcoming Data
U.S. durable goods orders for July fell by 2.8%, less than the expected 4% decline, following a sharp 9.4% drop in June. Markets now await the release of Q2 GDP data on Thursday and the Personal Consumption Expenditures (PCE) Price Index on Friday — the Fed’s preferred measure of inflation.
Gold faces dual pressures from a stronger dollar and wavering consumer confidence, alongside unprecedented political turmoil surrounding the Fed’s future. However, expectations of rate cuts and rising safe-haven demand may lend support to prices in the coming period.
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