Gold Declines Under Dollar Pressure... Will It Withstand the Washington Crisis?

Gold prices declined in local markets during trading on Thursday, with the ounce declining on the global stock exchange due to the rising dollar, despite geopolitical concerns and the Washington debt crisis, which supports it as a safe haven.

Gold prices declined in local markets by about 20 Egyptian pounds during trading today, compared to yesterday's closing price. The price of a gram of 21-karat gold reached 4,635 Egyptian pounds, while an ounce fell by about $31 to $3,292.

A gram of 24-karat gold reached 5,297 Egyptian pounds, a gram of 18-karat gold reached 3,973 Egyptian pounds, while a gram of 14-karat gold reached 3,107 Egyptian pounds, and the gold pound reached 37,080 Egyptian pounds. Gold prices in local markets rose by EGP 25 during trading on Wednesday, with the price of a gram of 21-karat gold opening at EGP 4,630 and closing at EGP 4,655. Meanwhile, the ounce rose by $29, opening at $3,294 and closing at $3,323.

The price of gold reversed its daily gains to around $3,300 per ounce, after hitting its highest level in two weeks, exceeding $3,345, under pressure from the rising US dollar.

Despite this decline, the outlook for gold remains positive, as it is strongly supported by rising concerns about the US debt crisis, which is boosting demand for safe-haven assets.

Market concerns escalated after the US House Rules Committee passed former President Donald Trump's tax cut bill, amid estimates that the US public debt will increase by $3.8 trillion over a decade, according to the Congressional Budget Office. Experts explained that the passage of the legislation would exacerbate the US fiscal deficit crisis and raise the government's interest obligations, at a time when Washington is facing economic challenges due to protectionist tariff policies.

This coincided with Moody's downgrading the US sovereign credit rating from Aaa to Aa1, due to the government and Congress' failure to agree on plans to reduce the deficit and rising interest costs.

Geopolitical tensions further supported gold, especially with the failure of truce talks between Russia and Ukraine and the continued escalation in the Middle East. US restrictions on exports of artificial intelligence chips to China also contributed to the escalation of trade tensions between Washington and Beijing, raising concerns about the stability of global supply chains.

Concerns about a potential stagflation are growing, supporting the continued high demand for gold. JPMorgan Chase CEO Jamie Dimon said that the Federal Reserve is taking the right approach by waiting for the economy to become clearer before making new decisions on interest rates.

"I don't see us in an ideal economic situation," Dimon added, stressing that prolonged high interest rates could hurt non-yielding assets like gold. Amid ongoing uncertainty, investors are awaiting the release of preliminary Purchasing Managers' Index (PMI) data for May, which could impact the short-term trajectory of gold prices.