Why Are Gold Traders Halting Sales Amid U.S. Election Uncertainty?

Many raw gold traders in the local market have stopped selling and are only purchasing gold as of Tuesday, amid growing concerns over fluctuations in the dollar exchange rate. This cautious approach comes as the U.S. presidential election looms, a high-stakes event that could push gold prices to record highs in the coming weeks.

Saeed Embabi, CEO of iSagha, an online gold and jewelry trading platform, explained that several traders have suspended sales to hedge against a potential dollar increase, setting their gold evaluations on an anticipated dollar rate that could exceed EGP 50. This precautionary move aligns with concerns about potential volatility in the global market, which could lead to higher prices for both gold and the dollar.

Embabi noted that the limited gold sales currently happening are mainly from small daily purchases sourced from citizens selling back to traders. Major gold holdings are being preserved to avoid the risks associated with large-scale sales during this period of uncertainty.

The market is experiencing heightened demand for gold, fueled by recent dollar movements in banks and the public’s concerns about ongoing price increases, particularly with limited gold supply available. Many traders are reluctant to risk depleting their inventories at current rates, expecting better margins if prices rise.

As of today, the dollar is trading at around EGP 49.20, while global gold prices have risen by approximately $5, with the ounce now valued at $2,741. In local markets, gold prices rose by EGP 55 on Monday, with 21-karat gold opening at EGP 3,770 per gram and closing at EGP 3,825. Gold remained volatile internationally, with prices fluctuating between $2,736 and $2,750 per ounce by the close of trading.

Other gold rates in the local market include 24-karat gold at EGP 4,371 per gram, 18-karat gold at EGP 3,279, and 14-karat gold at EGP 2,550. The gold pound registered at EGP 30,600.

The global markets are closely watching the upcoming U.S. presidential election, with polls showing a tight race between Democratic Vice President Kamala Harris and former Republican President Donald Trump. A Trump victory could impact the independence of the U.S. Federal Reserve, potentially complicating its response to inflation and driving up gold prices. In contrast, a Harris win would likely put downward pressure on gold.

Additionally, the U.S. Federal Reserve’s interest rate decision is expected on Thursday, with projections suggesting a 25-basis-point cut. Fed Chair Jerome Powell is also likely to hint at further rate reductions in his post-decision remarks, which could further influence the dollar and gold markets.