Gold Declines Locally and Globally Amid Thin Liquidity and Fed Rate Uncertainty

Gold prices retreated in both the domestic market and global exchanges during Tuesday’s trading, pressured by subdued demand and thin liquidity as Chinese and several Asian markets remain closed for the Lunar New Year holiday, according to a report issued by the iSagha platform.

Saeed Embabi, CEO of iSagha, said the price of 21-karat gold fell by around EGP 70 to EGP 6,570 per gram. Meanwhile, the global ounce declined by $74 to $4,920.

The 24-karat gram recorded EGP 7,509, 18-karat gold stood at EGP 5,631, and the gold pound (8 grams of 21-karat) reached approximately EGP 52,560.

Thin Trading Weighs on Prices

The decline came amid reduced trading volumes during the holiday period. Gold briefly touched a nearly two-week low of $4,859 per ounce before trimming some losses. U.S. markets were also closed Monday for Presidents’ Day, while Chinese markets are set to remain shut until next week, keeping overall liquidity subdued.

Trading activity is expected to pick up later in the U.S. session following the long weekend.

Despite the pullback, gold lacks strong selling momentum. The pause in the U.S. dollar’s recovery and continued declines in U.S. Treasury yields across the curve have limited downside pressure on the precious metal.

The U.S. Dollar Index, which tracks the greenback against a basket of six major currencies, was trading near 97.12 after hitting an intraday high of 97.25. Meanwhile, the 10-year U.S. Treasury yield fell to 4.02%, its lowest level since late November.

Focus on Federal Reserve Policy

Market attention remains centered on the timing of rate cuts by the Federal Reserve, as recent U.S. economic data have reshaped expectations.

Stronger-than-expected labor market figures have reduced the urgency for immediate rate cuts, while softer inflation readings have reinforced the view that monetary easing could resume in the second half of the year.

Traders are currently pricing in around 60 basis points of rate cuts in 2026, with CME’s FedWatch tool indicating that the first reduction could come as early as June. Lower interest rates typically support gold, as they reduce the opportunity cost of holding non-yielding assets.

Geopolitical Tensions Support Safe-Haven Demand

Beyond monetary policy, ongoing geopolitical tensions continue to underpin gold’s safe-haven appeal. A second round of nuclear talks between the United States and Iran has begun in Geneva, with Tehran emphasizing that effective sanctions relief remains a key condition for progress.

Military risks remain elevated following reports that Iran’s Revolutionary Guard has launched exercises in the Strait of Hormuz, while U.S. forces continue to maintain a significant presence across the Middle East.

Commerzbank: Gold Likely to Trade Sideways Around $5,000

Thu Lan Nguyen, analyst at Commerzbank, noted that gold briefly moved above the $5,000-per-ounce level before retreating toward $4,900, highlighting the metal’s difficulty in sustaining strong upward momentum under current conditions.

She explained that persistent uncertainty surrounding U.S. interest rate policy, coupled with a relatively calmer geopolitical backdrop in some areas, could keep gold trading within a sideways range around $5,000 in the near term until greater clarity emerges.

Canada Inflation Slows

In Canada, inflation eased slightly in January, with the annual Consumer Price Index rising 2.3% compared to 2.4% in December, while remaining flat on a monthly basis.

The core measure monitored by the Bank of Canada increased 2.6% year-over-year and 0.2% month-over-month. The data come ahead of the Bank’s March 18 meeting, where rates are widely expected to remain unchanged at 2.25%.

Although headline inflation is nearing the target level, core pressures remain relatively elevated, reflecting ongoing challenges linked to global trade realignments and potential tariff risks that could affect domestic prices.

Key Data Ahead

Markets are awaiting the release of the minutes from the Federal Open Market Committee meeting, along with the core Personal Consumption Expenditures (PCE) Price Index and the preliminary estimate of U.S. fourth-quarter GDP, which could provide clearer signals on the future path of monetary policy.