Gold Falls from Two-Week High as Local Premium Stands at EGP 50 per Gram

Gold prices declined in both the Egyptian market and the global bullion market on Thursday after the metal touched its highest level in nearly two weeks during the previous session, supported by escalating military tensions between the United States and Iran and increased safe-haven demand.

The price of 21-karat gold fell by approximately EGP 40 compared with Wednesday’s close, reaching around EGP 5,960 per gram, while spot gold dropped by about $39 to approximately $4,094 per ounce at the time of writing.

Meanwhile, 24-karat gold traded at around EGP 6,811 per gram, 18-karat gold reached EGP 5,109 per gram, and the Egyptian gold pound was priced at approximately EGP 47,680.

The local market had recorded strong gains on Wednesday, with 21-karat gold rising by EGP 100 after opening at EGP 5,900 and closing at EGP 6,000 per gram. Globally, gold climbed by about $65, rising from $4,068 to $4,133 per ounce.

Stronger Local Performance Driven by the Exchange Rate

Spot gold has gained approximately $77, or 1.9%, since the end of June, rising from $4,017 per ounce. In Egypt, 21-karat gold has increased by about EGP 275, or 4.8%, compared with its level at the end of the first half of the year.

Despite the recent rebound, global gold remains down by about $224, or 5.2%, since the beginning of 2026, compared with its opening level of $4,318 per ounce. By contrast, Egypt’s 21-karat gold is still up around EGP 130, or 2.2%, from its opening price of EGP 5,830 per gram.

The stronger performance of the local market has been primarily supported by the appreciation of the U.S. dollar against the Egyptian pound, which offset much of the impact of the sharp decline in the local premium.

The official selling exchange rate for the U.S. dollar has risen from approximately EGP 48.92 at the beginning of July to nearly EGP 51.30, an increase of about 4.9%, directly affecting local gold pricing.

Local Premium Rises to EGP 50

The local premium increased to approximately EGP 50 per gram, compared with around EGP 25 during the previous trading session. However, it remains significantly lower than the levels exceeding EGP 110 recorded last week and around EGP 210 at the end of June.

Since the beginning of July, the premium has fallen by about EGP 160 per gram, representing a decline of roughly 76%, reflecting a continued improvement in the balance between supply and demand despite the modest increase recorded today.

The latest increase does not change the broader market trend, which points to a narrowing gap between local and international prices as domestic pricing gradually returns to levels more closely aligned with global gold prices and the official exchange rate.

Why Did Gold Retreat Despite Escalating Conflict?

Gold surrendered part of its recent gains despite escalating military tensions in the Middle East because investors are now assessing the conflict from two opposing perspectives.

On one hand, geopolitical uncertainty continues to support safe-haven demand for gold. On the other, the sharp rise in oil prices has renewed inflation concerns and increased expectations that the U.S. Federal Reserve may keep monetary policy restrictive for longer.

Higher oil prices raise the likelihood that U.S. interest rates will remain elevated—or even increase further if inflationary pressures persist—reducing the appeal of non-yielding assets such as gold while making interest-bearing investments more attractive.

Brent crude has climbed above $97 per barrel amid concerns over energy supplies passing through the Strait of Hormuz and the Red Sea, bringing inflation back into the spotlight for global financial markets.

Federal Reserve Meeting in Focus

Investors are now turning their attention to next week's Federal Reserve meeting, where markets will focus not only on the interest-rate decision but also on the central bank's assessment of the inflationary impact of higher energy prices.

If policymakers characterize the recent surge in oil prices as temporary, gold could regain upward momentum. However, if the Fed signals growing concern over persistent inflation, additional pressure on bullion prices may follow.

Russia Continues to Reduce Gold Reserves

In a notable development within the central banking sector, the Central Bank of Russia reported that the country's gold reserves have declined by approximately 1.4 million ounces, or 43.5 tonnes, since the beginning of the year, bringing total holdings to around 73.4 million ounces (2,282 tonnes), valued at roughly $299 billion.

This marks the sixth consecutive monthly decline. Analysts believe part of the gold was sold to support the federal budget and strengthen foreign currency reserves as Russia continues to face economic pressure stemming from the war and international sanctions.

The decline does not necessarily indicate a strategic shift away from gold. Rather, it reflects temporary financing needs, while several central banks—most notably the People's Bank of China—continue to increase their official gold holdings.

Outlook

The global gold market is currently being shaped by an unusual combination of geopolitical and macroeconomic forces, with rising oil prices becoming one of the key drivers influencing bullion through their impact on inflation expectations and monetary policy.

Gold's near-term direction will likely depend on three major factors: developments in the Middle East, the trajectory of oil prices, and the Federal Reserve's policy decisions. While short-term volatility is expected to persist, gold continues to find support above the psychologically important $4,000-per-ounce level, reflecting resilient investment demand despite ongoing market pressures.