Gold Prices Drop as Strong Dollar and Weak Chinese Demand Hit Market

Gold prices fell in local and global markets on Monday, driven by the strengthening U.S. dollar and rising U.S. Treasury yields, along with lower Chinese demand for gold jewelry. These factors weighed on global gold prices, with the ounce dropping by $16, settling at $2,731.

According to Saeed Embabi, CEO of the iSagha platform for online gold and jewelry trading, the price of 21-karat gold in Egypt dropped by 15 EGP on Monday, reaching 3,720 EGP per gram, compared to Saturday’s closing. Other gold categories also saw declines, with 24-karat gold priced at 4,251 EGP per gram, 18-karat gold at 3,189 EGP, and 14-karat gold at 2,480 EGP. Meanwhile, the gold pound (weighing 8 grams of 21-karat gold) was recorded at 29,760 EGP.

Despite Monday’s decline, the iSagha weekly report showed that gold prices had increased in local markets by 0.7% during the past week, adding 25 EGP. The 21-karat gold price opened last week at 3,710 EGP, peaked at 3,755 EGP, and closed at 3,735 EGP.

On the global stage, gold prices climbed 1% last week, with the ounce rising by $26. It opened at $2,721, hit a record high of $2,758, and closed at $2,747. However, the recent decline was attributed to the dollar’s strength and higher U.S. bond yields, alongside reports of weakening demand from China, the world’s largest gold consumer.

The China Gold Association reported a significant decline in Chinese gold consumption during the first nine months of 2024. The data revealed that total gold consumption from January to September reached 742 tons, reflecting a drop of 11.18% compared to the same period in 2023.

The demand for gold jewelry saw the most substantial decline, falling 27.53% to 400 tons. However, demand for gold bars and coins rose sharply by 27.14%, reaching 283 tons. Industrial gold consumption also decreased slightly, dropping 2.78% to 59 tons.

The report attributed the decline in jewelry consumption to the continuous rise in gold prices, which discouraged consumer purchases. In contrast, the volatility in gold prices spurred higher trading volumes on the Shanghai Gold Exchange, with trading increasing 47.49% to 46,500 tons. Interest in gold ETFs also surged, with holdings reaching 91.39 tons, a 48.69% increase from the end of 2023.