Gold Falls 2.5% Globally in Its Biggest Weekly Loss Since June

Gold prices in Egypt's local market edged higher on Saturday, coinciding with the closure of global markets for the weekend, following a volatile trading week in which gold prices declined by approximately 2.5% worldwide, marking the precious metal’s largest weekly loss since early June. The decline came as inflation concerns and expectations of prolonged high interest rates outweighed gold’s traditional appeal as a safe-haven asset.

The price of 21-karat gold rose by around EGP 10 compared with Friday’s close to reach approximately EGP 5,810 per gram, while gold ended the week at around US$4,017 per ounce, down roughly US$103 from the beginning of the week.

Meanwhile, 24-karat gold traded at approximately EGP 6,640 per gram, 18-karat gold reached around EGP 4,980 per gram, while the gold pound coin stood at approximately EGP 46,480.

Egypt’s gold market is currently witnessing a positive shift, with consumer demand gradually returning to gold jewelry after an extended period during which a large share of buyers focused primarily on gold bars and coins as savings and investment vehicles.

This transition reflects a healthier balance in market demand, while manufacturers and retailers have demonstrated their ability to meet the needs of both jewelry buyers and investors. The market has also seen a wider offering of smaller-weight gold products to suit different purchasing capacities.

Despite this improvement, the hallmarking system continues to face operational challenges. Manufacturers and traders have complained about delays in hallmarking jewelry, largely because priority had been given to gold bars during the recent surge in investment demand. Market participants believe that separating the hallmarking process for jewelry from that of investment bars could improve efficiency and reduce waiting times.

Contrary to what is typically observed during periods of geopolitical tension, gold failed to benefit significantly from escalating geopolitical risks last week, as investors focused more on the economic implications of the conflict than on its political dimension.

Higher oil prices revived inflation concerns, pushing U.S. Treasury yields higher and reinforcing expectations that the Federal Reserve will keep interest rates elevated for longer, increasing the opportunity cost of holding non-yielding assets such as gold.

Although U.S. inflation and producer price data came in below market expectations, providing temporary support for gold, that support proved insufficient to offset pressure from a stronger U.S. dollar, rising energy prices, and higher bond yields, leaving gold with its steepest weekly decline in roughly six weeks.

In its latest report, the World Gold Council (WGC) said that uncertainty surrounding U.S. monetary policy and increased volatility in the bond market have become among the most influential drivers of gold prices. The Council noted that greater fluctuations in bond yields could ultimately reinforce gold’s role as a portfolio diversifier and hedge against economic uncertainty over the medium term.

Looking ahead to the second half of 2026, the WGC expects gold to trade within a relatively narrow range around current levels, as pressure from a stronger dollar and elevated bond yields persists. However, it added that slower global economic growth, lower interest rates, or heightened geopolitical risks could restore upward momentum in gold prices.

In its latest update on the Indian gold market, the WGC said that the sharp decline in gold prices during June encouraged a gradual recovery in jewelry demand, despite overall consumer demand remaining subdued. Meanwhile, major listed jewelry retailers reported strong revenue growth during the April–June quarter.

At the same time, inflows into gold exchange-traded funds (ETFs) and digital gold products increased, while demand for gold bars and coins softened. Indian gold imports also continued to decline amid ample domestic supply.

In China, wholesale gold demand improved during June, supported by continued strong inflows into gold ETFs. However, jewelry sales remained under pressure due to elevated prices and weak consumer confidence, while investment products continued to attract savers.

Developments in both India and China point to a gradual rebalancing within the world’s two largest gold-consuming markets. Lower prices have begun to bring consumers back to jewelry purchases, while investment products continue to enjoy solid demand, indicating a gradual shift in the structure of global gold demand.

Meanwhile, several international banks and financial institutions have lowered their gold price forecasts for 2026 and 2027, citing the strength of the U.S. dollar and growing expectations that U.S. interest rates will remain elevated for longer.

Bank of America reduced its average gold price forecast for 2026 to approximately US$4,360 per ounce, expecting continued pressure through August and September before prices establish a more stable bottom. Nevertheless, the bank stressed that the recent decline does not signal the end of gold’s long-term uptrend and believes the current weakness could provide opportunities for gradual buying.

HSBC also revised its forecast lower, expecting gold to trade between US$3,800 and US$4,700 per ounce for the remainder of the year. By contrast, Goldman Sachs maintained its constructive outlook, supported by continued central bank purchases and ongoing reserve diversification.

Gold enters the new trading week near the US$4,000-per-ounce level, with markets remaining highly sensitive to movements in oil prices, the U.S. dollar, Treasury yields, and statements from Federal Reserve officials.

Gold’s performance in the coming week will largely depend on these factors. A decline in energy prices could ease inflation concerns and support the precious metal by reducing expectations of prolonged high interest rates, while sustained gains in oil prices may keep gold under pressure by reinforcing expectations of tighter monetary policy.

Last week's price action suggests that markets are reassessing the key drivers of gold prices. While central bank purchases, reserve diversification, and geopolitical risks continue to provide strong long-term support for gold, their influence has been temporarily overshadowed by the strength of the U.S. dollar, rising Treasury yields, and expectations of a prolonged restrictive monetary policy.

Therefore, last week's decline does not represent a deterioration in gold's long-term outlook. Rather, it reflects the current dominance of monetary policy factors over market sentiment, with the future path of U.S. interest rates and the U.S. dollar remaining the decisive factors in determining the direction of the precious metal in the period ahead.