Gold declines locally and globally under dollar strength… regional escalation limits losses

Gold prices retreated in both local and international markets during Tuesday’s trading, pressured by the rise of the U.S. dollar, while escalating geopolitical tensions in the Middle East continued to underpin safe-haven demand for the precious metal, according to a report issued by the iSagha platform.

Saeed Embabi, CEO of iSagha, said gold prices in Egypt fell by approximately 55 pounds per gram, with 21-karat gold recording EGP 7,370. Globally, the ounce dropped by about $137 to $5,191.

Meanwhile, 24-karat gold reached around EGP 8,423, 18-karat gold stood at approximately EGP 6,317, and the gold pound coin approached EGP 58,960.

Embabi explained that the global pullback was driven primarily by dollar strength, supported by developments surrounding the U.S.-Israeli war against Iran. However, the rise in the local exchange rate—surpassing EGP 50 per dollar—helped cushion domestic losses.

Gold pricing in the Egyptian market is determined by three key factors: the U.S. dollar exchange rate, the global ounce price, and local supply-and-demand dynamics.

The U.S. dollar climbed to its highest level since January 20, exerting significant pressure on gold. At the same time, mounting fears of a broader regional conflict in the Middle East continue to provide solid support for investment demand in safe-haven assets. Geopolitical tensions have also reinforced the dollar’s status as the world’s primary reserve currency.

In parallel, reduced market expectations for aggressive monetary easing by the Federal Reserve further strengthened the dollar, intensifying selling pressure on non-yielding assets such as gold.

On the ground, Iran continued launching missiles and drones toward several Gulf countries. A drone strike targeting the U.S. Embassy in Riyadh marked a further escalation. Additionally, Iran’s Revolutionary Guard Navy announced the closure of the Strait of Hormuz and the suspension of vessel transit through the strategic waterway, raising concerns about major disruptions to global energy markets and trade flows.

U.S. Secretary of State Marco Rubio stated that Washington is preparing for a significant escalation of attacks against Iran within the next 24 hours, following remarks by President Donald Trump indicating that a larger wave of operations has yet to begin and warning of the risks of a prolonged conflict. The U.S. State Department also urged American citizens to leave Middle Eastern countries immediately due to deteriorating security conditions.

These developments may limit further downside in gold prices amid sustained hedging demand. With no major U.S. economic data releases on the agenda, markets are expected to remain focused on war-related developments, while investors are advised to exercise caution given the likelihood of continued volatility.

In a related note, Thu Lan Nguyen, commodity analyst at Commerzbank, said gold briefly climbed above the $5,400 per ounce level during Monday’s session, outperforming both the dollar and U.S. Treasury bonds, before retreating to levels seen at the end of last week.

She attributed the pullback to market focus shifting toward inflation risks driven by rising oil prices, which have reduced expectations for interest rate cuts. This dynamic supported the dollar and weighed on gold.

Nguyen emphasized that gold’s trajectory in the coming period will largely depend on how central banks assess inflation risks. If policymakers opt to wait and monitor the inflationary impact of higher oil prices before making new monetary decisions, this could provide additional support for gold prices.