Gold Gains 3% Since the Start of July Despite Weekly Losses

Gold prices in the Egyptian market declined by 0.6% last week, while global bullion prices fell by 1.3%, following a volatile trading week driven by a stronger U.S. dollar, higher U.S. Treasury yields, and growing expectations that U.S. interest rates will remain elevated for longer.

The price of 21-karat gold fell by EGP 35 during the week. It opened trading at EGP 5,885 per gram, dropped to a weekly low of EGP 5,740, before recovering part of its losses to close at EGP 5,850.

Internationally, spot gold lost $56 over the week. The metal opened at $4,176 per ounce, climbed to a weekly high of $4,203 on July 6, then declined to $4,022 on July 8 before rebounding to settle at $4,120 per ounce. The $181 trading range reflected continued market volatility and uncertainty over price direction.

In the local market, 24-karat gold ended the week at around EGP 6,686 per gram, while 18-karat gold reached EGP 5,014. The gold sovereign traded at approximately EGP 46,800.

Despite the weekly decline, gold has maintained gains since the beginning of the second half of the year. The price of 21-karat gold has risen by EGP 165, or 2.9%, compared with its end-June close of EGP 5,685 per gram. Meanwhile, global gold has advanced by $103, or 2.6%, after ending June at $4,017 per ounce.

These movements follow one of the most volatile periods in the history of the gold market. Twenty-one-karat gold reached a record high of EGP 7,600 per gram on March 2, while the international gold price peaked at an all-time high of $5,626 per ounce on January 29 before retreating sharply during the second quarter after the extraordinary rally recorded earlier this year.

The premium in Egypt's local gold market also narrowed from EGP 134 to EGP 101 per gram above the estimated fair value, a decline of EGP 33, or 24.6%.

Globally, gold came under pressure as the U.S. dollar strengthened and Treasury yields increased, while investors awaited the release of the Federal Reserve's meeting minutes, reinforcing expectations that interest rates could remain higher for longer.

Additional pressure came from rising oil prices amid tensions in the Middle East, fueling concerns about higher inflation. As a result, investors increasingly expected the Federal Reserve to maintain a restrictive monetary policy. Geopolitical tensions are now influencing gold differently than in previous years: while they continue to support safe-haven demand, they also reinforce expectations of prolonged high interest rates, limiting the precious metal's upside.

Although gold recovered part of its losses during the second half of the week on bargain buying, the rebound was not enough to erase the weekly decline.

HSBC recently lowered its average gold price forecasts for 2026 and 2027, citing the strength of the U.S. dollar and the prospect of higher interest rates. However, the bank emphasized that continued central bank purchases, geopolitical risks, and rising global debt levels will remain key long-term drivers supporting gold prices.

The World Gold Council also believes that the second half of 2026 will be crucial in determining gold's next direction, noting that prices will continue to be influenced by inflation trends, the U.S. dollar, Federal Reserve policy, ongoing central bank buying, and investment demand.

In Egypt, the Central Bank's official U.S. dollar selling rate increased from EGP 48.93 on July 6 to EGP 49.77 on July 9, representing a rise of EGP 0.84, or approximately 1.7%.

The stronger U.S. dollar against the Egyptian pound absorbed part of the decline in international gold prices and limited losses in the domestic market. While the global gold price fell by 1.3%, the price of 21-karat gold in Egypt declined by only 0.6%. Gold prices in Egypt are primarily determined by three factors: international bullion prices, the exchange rate of the U.S. dollar against the Egyptian pound, and the local market premium driven by supply and demand.

Although there are no official weekly statistics tracking gold sales in Egypt, market contacts with leading traders, manufacturers, and dealers indicate that sales have improved noticeably since the beginning of June, coinciding with the correction in gold prices from their record highs.

The recovery has been observed across gold bars, bullion coins, and jewellery, as some consumers took advantage of lower prices. The decline in the local premium also reflects improved supply conditions and smoother delivery operations, contributing to better market balance rather than weaker demand.

Market analysts increasingly believe that geopolitical tensions are no longer the sole driver of gold prices. Instead, investors are focusing more on how these developments affect inflation and U.S. monetary policy, making gold prices more volatile and less responsive to traditional safe-haven demand than in previous years.

The nearly 3% rise in gold prices since the beginning of July, despite last week's decline, suggests that the market remains resilient following the sharp correction experienced during the second quarter. Prices have already recovered part of their earlier losses as the second half of 2026 gets underway.

The recent decline has encouraged many consumers to return to the market, purchasing both investment products such as gold bars and coins, as well as jewellery. Earlier record-high prices had caused many buyers to postpone purchases, but sales have gradually improved since June.

Gold is expected to remain volatile in the coming weeks as investors monitor upcoming U.S. inflation data and Federal Reserve policy decisions. At the same time, continued central bank buying and investment demand are likely to provide support and help prevent any sharp declines in prices.

For investors and savers, gradual purchasing remains the preferred strategy rather than investing all available funds at once. Gold prices are highly sensitive to global economic developments and rarely move in a single direction for extended periods.