Gold Fluctuates Between Dollar Strength and Interest Rate Cut Expectations

Gold prices saw a slight decline in local markets on Tuesday, mirroring a drop in global spot prices due to a mild rebound in the U.S. dollar and equities, which reduced demand for the safe-haven metal.

In local markets, gold prices dropped by EGP 25 compared to Monday’s closing levels, with 21-karat gold recording EGP 4,685 per gram. Meanwhile, the global ounce price declined by approximately $28, reaching $3,352.

24-karat gold registered EGP 5,354 per gram, while 18-karat gold reached EGP 4,016 per gram. The 14-karat variety stood at EGP 3,124 per gram, and the gold pound (8 grams of 21k gold) recorded EGP 37,480.

This pullback comes after Monday’s surge, during which local gold prices climbed by EGP 110, with 21-karat gold starting the day at EGP 4,600 and ending at EGP 4,710. Globally, the ounce price jumped $90—from an opening level of $3,290 to $3,380.

The local drop reflects a broader global move as the ounce price, after hitting a four-week high, came under selling pressure for profit-taking amid a dollar rebound and improved risk appetite in financial markets.

The U.S. Dollar Index rose by 0.2% to 104.35, regaining part of its recent losses. U.S. equities also posted strong gains, which positively impacted Asian markets and led some investors to temporarily reduce their gold holdings.

 persistent geopolitical tensions and growing expectations that the U.S. Federal Reserve will cut interest rates in 2025 remain supportive of gold prices, cushioning it from deeper losses despite market headwinds.

Forecasts now indicate the possibility of two interest rate cuts by the Fed next year, supported by recent statements from several Fed officials. This strengthens gold’s appeal as a hedge against interest rate volatility and inflation.

Markets are closely watching a wave of upcoming U.S. economic data this week, including the JOLTS job openings report, the closely watched Non-Farm Payrolls report on Friday, as well as the European Central Bank meeting and weekly jobless claims.

On Monday, the Institute for Supply Management (ISM) reported a decline in the manufacturing PMI to 48.5 in May, down from 48.7 in April and below expectations of 49.3. This reflects continued pressure on the U.S. industrial sector. The report also showed stable pricing pressures, with the prices index holding at 69.4.

Although gold did not react sharply to the data, the weak manufacturing figures contributed to investor concerns about economic slowdown, providing additional short-term support for the yellow metal.

Overall, gold continues to trade in a relatively stable range, caught between opposing forces—on one side, pressure from a stronger dollar and rising equities, and on the other, support from geopolitical risks and expectations of monetary easing. Investor sentiment remains closely tied to upcoming U.S. data, with global markets on high alert.