Gold Declines Locally and Globally Due to Escalating Monetary Tightening Expectations

Gold prices declined in local markets and on the global exchange during Monday's trading, amidst growing expectations of central banks moving towards adopting more stringent monetary policies to combat inflation resulting from rising energy prices, according to a report by the Marsad Al Dahab for Economic Studies.

The Marsad Al Dahab stated that local gold prices decreased by approximately 50 Egyptian pounds compared to the close of last week's trading, with the price of 21-carat gold reaching around 6910 pounds. Globally, the ounce fell by about 60 dollars to reach 4554 dollars at the time of writing the report, according to data from the World Gold Council.

24-carat gold recorded about 7897 pounds, and 18-carat gold reached 5923 pounds, while the price of a gold pound was 55280 pounds.

On a weekly basis, data from the Marsad Al Dahab showed that local prices lost about 40 pounds last week, with 21-carat gold opening trading at 7000 pounds and closing at 6960 pounds. In contrast, the global ounce fell by about 96 dollars during the same period, from 4710 dollars to 4614 dollars.

On a monthly basis, local gold prices decreased by about 335 pounds during April, a decline of 4.6%, after 21-carat gold opened the month at 7290 pounds, touched a low of 6830 pounds on April 29, before closing at 6955 pounds. Globally, the ounce fell by 1% during the month, losing 51 dollars, amidst sharp fluctuations between 4790 and 4514 dollars.

The report clarified that markets are anticipating the continued trend of central banks towards monetary tightening, amidst inflationary pressures resulting from rising energy prices and ongoing geopolitical tensions in the Middle East, which puts pressure on gold price movements.

In this context, US President Donald Trump announced a plan to manage ship traffic stuck in the Gulf via the Strait of Hormuz as part of what was called "Operation Freedom," warning of firm action against any attempts to obstruct navigation.

In contrast, Iranian parties warned that any American intervention would be considered a violation of the ceasefire, with escalating mutual accusations and the possibility of renewed escalation, which limits the decline in oil prices and keeps inflationary pressures in place.

Economically, recent US data reinforced these expectations, showing an acceleration in inflation rates during March, which supports the likelihood of the Federal Reserve keeping interest rates high for longer.

The Fed also decided to keep the interest rate unchanged at the 3.50% - 3.75% range, amidst a clear division within the Monetary Policy Committee.

In the same context, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, indicated that continued geopolitical tensions increase inflation risks and does not rule out resorting to interest rate hikes if circumstances warrant.

These developments come as investors assess the upcoming steps of US policy towards Iran and the Strait of Hormuz, especially with Tehran presenting a modified peace proposal, while gold prices remain down by about 12% since the outbreak of recent tensions.

In contrast, data from the World Gold Council showed that central banks continued to strengthen their gold reserves during the first quarter of the year, reflecting continued official demand for the precious metal.

On the macroeconomic front, the US economy grew by 2% annually during the first quarter, supported by a 1.6% increase in consumer spending, especially in the services sector, along with a decline in unemployment claims to their lowest levels in decades, reflecting relative strength in the labor market.

Markets are awaiting important US economic data this week, foremost among them the non-farm payrolls report, in search of new indicators that may determine the direction of monetary policy in the coming period, and thus the trajectory of gold prices.