Gold Rises as Falling Oil Prices Ease Inflation Concerns

Gold prices rose in local and global markets on Tuesday, driven by a sharp decline in oil prices that has calmed inflation fears and increased expectations for faster interest rate cuts. With inflation pressure easing, investors are turning to gold as a safe-haven asset, boosting demand.

According to Saeed Embabi, CEO of iSagha, a gold and jewelry trading platform, gold prices in local markets saw fluctuations, with 21-karat gold dropping 10 EGP earlier in the day to settle at 3,740 EGP per gram. On the international front, the ounce increased by $9, closing at $2,751.

Embabi also reported that 24-karat gold reached 4,274 EGP per gram, 18-karat gold stood at 3,206 EGP, and 14-karat gold was priced at 2,494 EGP. Meanwhile, the gold pound, weighing 8 grams of 21-karat gold, traded at 29,920 EGP.

The recent rise in gold prices is closely tied to the performance of the oil market, which experienced a 6% drop on Monday. This decline came after reports that Israel’s airstrikes on Iran targeted only military sites, leaving oil and nuclear facilities untouched. The absence of disruption to Iran’s oil infrastructure eased market concerns and pushed crude prices lower, influencing global inflation expectations.

The drop in oil prices has raised hopes that central banks could reduce interest rates sooner than expected, which would further enhance the appeal of non-interest-bearing assets like gold. Embabi explained that “the decline in oil prices will likely stabilize inflation, paving the way for interest rate cuts, which are typically favorable for gold.”

According to iSagha’s daily report, local gold prices also experienced slight declines on Monday, with 21-karat gold opening at 3,735 EGP per gram and closing at 3,730 EGP. Similarly, the ounce on global markets dropped by $5, opening at $2,758 and closing at $2,742. Despite the temporary dip, Tuesday’s market rebound suggests growing investor interest in gold as inflationary concerns ease.

Embabi emphasized that the evolving geopolitical situation continues to influence market dynamics. The reduction in oil prices following Israel’s limited strikes on Iran offers temporary relief to energy markets, which in turn has stabilized global inflation expectations. This stabilization supports interest rate cuts, creating a favorable environment for gold prices to rise further.