Gold Extends Gains as Markets Await Federal Reserve Decisions

Gold prices continued to rise in both local and global markets during Thursday’s trading, as investors increasingly bet on a potential interest rate cut by the U.S. Federal Reserve at its upcoming September meeting.

In Egypt, local gold prices climbed by around EGP 10 today compared to Wednesday’s close, with the 21-karat gram reaching EGP 4,635, while spot gold rose by $4 to settle at $3,410 per ounce.

The 24-karat gram recorded EGP 5,297, the 18-karat gram EGP 3,973, and the 14-karat gram EGP 3,090. The gold pound coin stood at EGP 37,080.

On Wednesday, gold had already risen by EGP 15 locally, with the 21-karat gram opening at EGP 4,605 and closing at EGP 4,620, while spot gold gained $5, moving from $3,391 to $3,396 per ounce.

Market Drivers

Gold is holding firm above the $3,400 per ounce level in European trading, as confidence grows among investors that the Federal Reserve will cut rates in September. According to the CME FedWatch Tool, markets are pricing in an 87% probability of a rate cut.

Recent remarks by John Williams, President of the Federal Reserve Bank of New York, reinforced these expectations. He stressed the need to return interest rates to a “neutral level” amid slowing GDP growth. Williams added that the Fed’s final decision would depend on upcoming economic data but left the door open for a cut.

This outlook weighed on the U.S. dollar, with the dollar index holding steady near the 98-point mark against a basket of major currencies.

What Investors Are Watching

Markets are now awaiting the release of U.S. Q2 GDP data, due later today, followed by the Personal Consumption Expenditures (PCE) price index on Friday, which will shape the Fed’s monetary policy outlook in the months ahead.

Domestic Outlook and the Egyptian Pound

In Egypt, attention is focused on the Central Bank of Egypt’s Monetary Policy Committee meeting, the fifth this year, with strong expectations of an interest rate cut for the first time since July.

Current benchmark rates stand at 24% for deposits, 25% for lending, and 24.5% for the main operation rate.

A Reuters poll of eight economists forecast an average cut of 100 basis points (1%), lowering the deposit rate to 23% and the lending rate to 24%. Meanwhile, HC Securities & Investment predicted a larger cut of 200 basis points (2%), citing improving macroeconomic indicators.

On the currency front, the U.S. dollar remained stable in Egyptian banks, trading within the range of EGP 48.00 – 48.20 for buying and EGP 48.10 – 48.30 for selling, as markets await the central bank’s decision and its potential impact on the pound.