Gold Prices Volatile in Local Markets as Global Ounce Hits New Peak

On Monday, gold prices in local markets experienced volatility, influenced by minor fluctuations in global gold prices. The instability was driven by the weakening U.S. dollar, a decline in U.S. Treasury bond yields, and increasing bets on a potential interest rate cut by the U.S. Federal Reserve, which could be as much as 50 basis points.

Saeed Embabi, CEO of the gold and jewelry trading platform iSagha, stated that local gold prices saw limited fluctuations during Monday's trading. After an initial rise of EGP 5 at the start of trading, prices dropped by EGP 10, compared to the close of last week's trading on Saturday. This brought the price of 21-karat gold to EGP 3,470 per gram. Meanwhile, the ounce of gold also experienced volatility, initially hitting a new peak of $2,589 before retreating to $2,579.

Embabi added that the price of 24-karat gold reached EGP 3,966 per gram, while 18-karat gold was priced at EGP 2,974. In contrast, 14-karat gold recorded EGP 2,314, and the gold pound stood at EGP 27,760.

Last week, gold prices in local markets rose by 2.5%, or EGP 85, with the 21-karat gold price opening the week at EGP 3,395, peaking at EGP 3,500, and closing at EGP 3,480. On the global market, gold prices climbed 3.3%, or $82, with the ounce starting at $2,497, reaching a high of $2,585, and ending at $2,579.

Embabi noted that the gap between local and global gold prices widened to EGP 55 per gram on Monday. This gap reflects the global price of gold and the exchange rate of the U.S. dollar at the Central Bank of Egypt. The fair value of a gram of 24-karat gold, according to these metrics, should be around EGP 4,021.

According to iSagha data, gold has generated profits of $520, or 25.3%, since the beginning of the year. This surge is primarily driven by expectations that the U.S. Federal Reserve will end its monetary tightening cycle, along with increased purchases by central banks and strong demand for gold as a safe-haven asset amid conflicts in the Middle East.

Embabi pointed out that ongoing speculation regarding a rate cut by the Federal Reserve will continue to support gold prices, as inflation in the U.S. shows signs of easing. This favorable environment has kept gold in demand both as a hedge against economic instability and as a key investment for central banks worldwide.