Gold Edges Lower as Rate Cut Expectations Fade Ahead of Key Central Bank Decisions

Gold prices recorded a slight decline in both local markets and global exchanges during Tuesday’s trading, amid fading expectations for interest rate cuts by the U.S. Federal Reserve, according to a report issued by the iSagha platform.

Saeed Embabi, CEO of iSagha, stated that local gold prices fell by حوالي 5 pounds, with 21-karat gold recording 7,315 EGP per gram. Meanwhile, the global ounce declined by about $2 to reach $5,005.

He added that 24-karat gold reached حوالي 8,360 EGP per gram, 18-karat gold stood at 6,270 EGP, and the gold pound coin recorded approximately 58,520 EGP.

Embabi noted that gold is trading within a narrow range, as traders remain cautious and avoid major directional bets ahead of a busy week of monetary policy decisions from major central banks.

Focus on central banks amid renewed inflation concerns

Upcoming monetary policy decisions from major central banks—including the U.S. Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan, the Bank of Canada, and the Swiss National Bank—come at a highly sensitive time for global markets.

While these institutions are widely expected to keep interest rates unchanged, market focus will be on forward guidance and policymakers’ assessment of the future path of monetary policy, particularly as rising oil prices—driven by ongoing geopolitical tensions—revive inflation concerns.

This backdrop has strengthened expectations that central banks may delay rate cuts and keep borrowing costs higher for longer.

Higher interest rates increase the opportunity cost of holding non-yielding assets like gold, contributing to continued downward pressure on the metal, especially as markets reassess global rate expectations toward a more hawkish stance.

Traders now expect only a 25 basis point rate cut by the Federal Reserve by year-end, down from earlier expectations exceeding 50 basis points. According to the CME FedWatch Tool, rates are expected to remain unchanged through April, June, and July, with September currently seen as the most likely timing for a cut, with a probability of حوالي 50.8%.

Geopolitical tensions limit gold’s losses

At the same time, escalating geopolitical tensions continue to provide support to gold prices, helping limit losses, as the conflict involving the United States, Israel, and Iran shows no clear signs of de-escalation.

Tensions in the Strait of Hormuz remain a key concern, keeping energy markets on edge.

U.S. President Donald Trump called on other nations to help secure the strategic waterway, urging countries that rely on it to support such efforts. However, international backing has remained limited.

Japan’s defense minister stated there are no plans to deploy ships, while UK Prime Minister Keir Starmer said Britain would not be drawn into a wider conflict. Spain’s foreign minister also warned against actions that could escalate tensions further.

The Secretary-General of the International Maritime Organization noted that escorting vessels through the Strait would not guarantee full safety, adding that military solutions are not sustainable in the long term.

Safe-haven demand rises amid escalating risks

As the conflict enters its third week, uncertainty continues to grow, supporting demand for gold as a safe-haven asset—especially following attacks targeting the UAE, which triggered a fire at Fujairah port, a key oil export hub, and led to a halt in loading operations.

These developments have pushed oil prices above $100 per barrel, amid near-total disruption in the Strait of Hormuz and reluctance from some U.S. allies to deploy naval forces to protect oil tankers.

While gold is traditionally seen as a hedge against inflation, rising energy prices have revived inflationary pressures, reducing expectations for rate cuts and weighing on gold’s performance.

Markets are now awaiting the Federal Reserve’s policy statement, with broad expectations that rates will remain unchanged for a second consecutive meeting, alongside closely watching decisions from other major central banks holding their first meetings since the outbreak of the conflict in late February.