Gold Holds Its Gains Amid U.S. Monetary Policy Uncertainty

Gold prices recorded a slight increase in both local and global markets on Monday, as the rise of the U.S. dollar limited the yellow metal’s gains. The market continues to face uncertainty regarding the Federal Reserve’s monetary policy direction in the coming period, according to a report issued by iSagha platform for gold and jewelry trading.

Local and Global Price Movements

Saeed Embabi, CEO of iSagha, said that gold prices in the local market rose by about 10 Egyptian pounds, with the 21-karat gram reaching EGP 5,360, while the ounce increased by $14, reaching $4,017 globally.

The 24-karat gram recorded EGP 6,126, the 18-karat reached EGP 4,594, and the gold pound stabilized at EGP 42,880.

Last week, prices fell by EGP 200 locally and $111 globally, but they remain higher on a monthly basis—up 3.3% in Egypt and 4% internationally.

Impact of U.S. Monetary Policy

The report noted that gold is struggling to achieve strong gains amid the continued strength of the U.S. dollar. The Federal Reserve recently cut interest rates by 25 basis points but signaled no further monetary easing this year.

This stance boosted the dollar’s value and limited investor appetite for gold, while improved risk sentiment and higher global stock prices reduced demand for safe-haven assets.

Trade Tensions and Institutional Demand

The report added that easing trade tensions between the United States and China has weakened gold’s appeal as a safe haven. Nevertheless, the precious metal remains supported by institutional demand and persistent geopolitical and economic risks, maintaining an overall bullish long-term outlook.

Meanwhile, the White House announced a temporary trade agreement with Beijing, under which China will ease export restrictions on rare earth minerals in exchange for Washington extending the suspension of some tariffs. The deal followed a meeting between President Donald Trump and President Xi Jinping during the APEC Summit in South Korea.

Pressure from China: VAT Adjustment

Gold faced additional pressure after China’s Ministry of Finance announced a reduction in the VAT rebate on gold purchased through the Shanghai Gold Exchange and the Shanghai Futures Exchange, cutting it from 13% to 6%, effective November 1, 2025.

Analysts at ANZ Research described the move as a “disappointment” for Chinese investors, as it removes a key tax incentive that had boosted bullion trading. They warned that the policy could have far-reaching effects on investment demand and retail sales in China—the world’s largest gold consumer.

Market and Corporate Reactions

The decision triggered a sharp sell-off in Chinese jewelry stocks: Chow Tai Fook shares fell 12% in Hong Kong, Chow Sang Sang declined by over 8%, and Lao Feng Xiang (Laopu Gold) dropped more than 9%.

Analysts at Citi Group noted that jewelry companies will likely need to raise retail prices to offset the new tax-related costs.

Gold Between Support and Pressure

Despite the Chinese tax pressures and the Federal Reserve’s cautious tone, gold remains attractive as a strategic asset, supported by strong central bank and institutional buying, in addition to the ongoing U.S. government shutdown, now in its 33rd day, which continues to weigh on the American economy and bolster safe-haven demand.

Gold is currently trading in a narrow range around $4,000 per ounce, fluctuating between the dollar’s strength and China’s tax policy shift on one side, and sustained support from geopolitical uncertainty and institutional demand on the other. Markets are now awaiting new signals from the Federal Reserve and upcoming U.S. economic indicators to determine the next direction for the precious metal.