Gold prices increased in domestic and global markets on Wednesday, driven by expectations of interest rate cuts as investors awaited the release of US inflation data later in the day.
Saeed Imbaby, CEO of the “iSaaga” platform for online gold and jewelry trading, stated that gold prices in local markets rose by 10 pounds during trading, with the price of a gram of 21k gold reaching 3,485 pounds. Additionally, the ounce rose on the global stock exchange by about $6 to $2,473.
Imbaby noted that a gram of 24k gold was priced at 3,983EGP, a gram of 18k gold at 2,987 pounds, and a gram of 14kgold at approximately 2,324EGP, adding that the gold pound recorded about 27,880EGP.
Gold prices recorded relative stability in local markets on Tuesday, opening at 3,475EGP, touching 3,480EGP during trading, and closing at 3,475EGP for a gram of 2k gold. On the global stock exchange, gold prices declined by $3, opening at $2,470 and closing at $2,767 per ounce.
On Tuesday, the US Department of Labor reported a 0.1% decrease in the producer price index for July, following a 0.2% increase in June. Wholesale headline inflation rose by 2.2% over the past twelve months, lower than the consensus of 2.6% and the June reading of 2.7%. The core producer price index, which excludes volatile food and energy costs, remained steady at 0.0% in July, better than economists' expectations of a 0.2% increase. The annual core producer price index reached 2.4%, much lower than consensus expectations of 3.0% and the June reading of 3.0%.
"The decline in the producer price index reflects a decrease in inflationary pressures, increasing the likelihood of the US Federal Reserve ending its monetary tightening cycle and implementing interest rate cuts at its September meeting. This could support a long-term increase in gold prices," Imbaby explained.
Geopolitical tensions in the Middle East, expectations of interest rate cuts, and a renewed interest from central banks in purchasing gold are also expected to drive demand and prices.
Meanwhile, China's central bank abstained from adding to its gold reserves for the third consecutive month in July, with its gold holdings remaining at 2,264 tonnes, accounting for about 5% of its total reserves, according to data from the World Gold Council.
Markets are eagerly anticipating US inflation data later in the day for further insights into future interest rate developments, with economists expecting a 0.2% monthly increase in inflation and a slight slowing of annual core inflation to 3.2%.
Contributed by Ahmed Emam
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