Gold Erases All 2026 Gains and Records Its First Annual Loss

The Marsad Al Dahab reported a sharp decline in both local gold prices and global bullion markets during Wednesday's trading session, with prices falling to their lowest levels in nearly two weeks. The decline comes amid continued pressure from a stronger U.S. dollar and rising market expectations that the Federal Reserve could resume interest rate hikes during the second half of the year, reducing the appeal of non-yielding assets such as gold.

The Marsad Al Dahab stated that local gold prices fell by approximately EGP 195 compared with Tuesday's close, with 21-karat gold dropping to EGP 5,630 per gram. Meanwhile, gold prices in international markets declined by around $82 per ounce, trading near $4,060 at the time of writing.

Accordingly, 24-karat gold traded at approximately EGP 6,434 per gram, while 18-karat gold reached EGP 4,826 per gram. The gold sovereign recorded EGP 45,040.

The report noted that gold prices had already lost around EGP 115 during Tuesday's session, as 21-karat gold opened at EGP 5,940 and closed at EGP 5,825. Globally, gold fell by approximately $50, from $4,192 to $4,142 per ounce.

The local market premium declined to around EGP 87 per gram, coinciding with a drop in the U.S. dollar exchange rate in Egyptian banks to approximately EGP 49.77, according to data from the Central Bank of Egypt. This has brought domestic prices closer to their fair value amid weakening demand and growing expectations among consumers that prices may continue to decline.

Since the beginning of June, local gold prices have lost approximately EGP 1,135 per gram, equivalent to a decline of nearly 16.8%, after 21-karat gold opened the month at EGP 6,765. During the same period, the global gold price lost about $570 per ounce, representing a decline of roughly 13% from the month's opening level of $4,540.

The Marsad Al Dahab emphasized that local gold prices have now erased all gains achieved since the beginning of 2026 and moved into negative territory for the first time this year. Twenty-one-karat gold opened the year at EGP 5,830 per gram but fell to EGP 5,630 during Wednesday's trading, recording a loss of EGP 200 per gram, or approximately 3.4%. Globally, gold has declined by about $348 per ounce since the beginning of the year, representing a loss of around 8%.

These losses follow an extraordinary rally that pushed gold to record gains of nearly EGP 1,770 per gram during the first quarter of the year before markets entered a sharp correction phase driven by changing expectations regarding U.S. monetary policy and the decline of local market premiums.

Global Market Pressures Continue

Gold prices in international markets fell to their lowest levels in nearly two weeks as investors continued to react to the strength of the U.S. dollar and rising U.S. Treasury yields. The move follows last week's Federal Reserve meeting, where policymakers left interest rates unchanged but maintained a hawkish tone, signaling the possibility of additional tightening if inflation remains elevated.

These signals prompted investors to reassess their expectations for monetary policy, significantly increasing the probability of further tightening later this year.

The U.S. dollar remains the dominant factor influencing gold prices. The Dollar Index recently climbed to its highest level in more than a year, making gold more expensive for holders of other currencies and reducing global investment demand for the precious metal.

At the same time, rising Treasury yields have enhanced the attractiveness of interest-bearing assets relative to gold, prompting many investment funds to reduce their exposure to bullion.

Although geopolitical uncertainty surrounding U.S.-Iran negotiations persists, gold has failed to benefit from its traditional safe-haven status. Monetary policy concerns have outweighed political risks in directing market sentiment. Additionally, lower oil prices in recent weeks have eased global inflation concerns, reducing the need for inflation hedges such as gold.

Current price levels reflect the magnitude of the correction experienced by the gold market in recent months. The metal has lost more than 27% from the record highs reached in January 2026 when prices exceeded $5,600 per ounce, and is now trading close to its lowest levels of the year.

Focus Turns to U.S. Inflation Data

Investors are now closely watching the upcoming U.S. Personal Consumption Expenditures (PCE) report, one of the Federal Reserve's preferred inflation gauges.

A stronger-than-expected reading could reinforce expectations of additional interest rate hikes, increasing pressure on gold prices. Conversely, softer inflation data could provide the precious metal with an opportunity to recover part of its recent losses.

Major Banks Remain Constructive on Long-Term Gold Outlook

Despite the severe correction in gold prices, several major financial institutions continue to maintain positive medium- and long-term forecasts.

Goldman Sachs recently lowered its year-end 2026 target to $4,900 per ounce from $5,400, reflecting reduced expectations for Federal Reserve rate cuts this year.

Deutsche Bank revised its forecast to $4,300 per ounce for the third quarter and $4,800 for the fourth quarter of 2026, while warning that prices could decline further if the Federal Reserve adopts a more aggressive tightening stance.

Meanwhile, Bank of America continues to hold a bullish long-term view, maintaining that gold could eventually reach $6,000 per ounce, although not as quickly as previously anticipated earlier this year due to changing monetary policy expectations and weaker investment demand.

Overall, gold's future direction is expected to remain primarily dependent on U.S. monetary policy developments, the trajectory of the U.S. dollar, and Treasury yields rather than geopolitical factors. As a result, upcoming U.S. economic data are likely to play a decisive role in shaping the precious metal's performance during the second half of 2026.

The Marsad Al Dahab believes that the current decline represents the most significant repricing process in the Egyptian gold market since the beginning of the year, driven by the contraction of local premiums and the fading buying pressures that previously pushed prices to record highs.

According to the Observatory, the domestic market is undergoing a comprehensive repricing phase driven by three main factors: lower international gold prices, a weaker U.S. dollar exchange rate in Egypt, and the sharp decline in local premiums. Together, these factors have amplified losses in the Egyptian market beyond those recorded internationally.

The Marsad Al Dahab expects short-term volatility to persist until the direction of U.S. monetary policy becomes clearer and key inflation indicators are released. It also considers the $4,000-per-ounce level a critical threshold that could determine gold's global trend during the second half of the year.

Local demand is expected to remain subdued as consumers continue to wait for lower price levels unless new catalysts emerge to support a return of investment demand for the precious metal.