Gold prices in Egypt’s local markets dropped by EGP 50 per gram over the past week, reflecting a 1.3% decline, while global gold prices fell by 1%. The downturn followed signals from the US Federal Reserve about slowing the pace of interest rate cuts in 2025, according to a report by the gold and jewelry trading platform "iSagha."
Saeed Imbaby, Executive Director of iSagha, revealed that the price of 21-karat gold, the most popular in the local market, began the week at EGP 3,820 per gram and ended at EGP 3,770. Globally, gold prices dropped by $26 per ounce, opening at $2,648, dipping to $2,580, and closing at $2,622.
Imbaby highlighted the performance of other gold categories in the local market:
- 24-karat gold: EGP 4,309 per gram
- 18-karat gold: EGP 3,231 per gram
- 14-karat gold: EGP 2,514 per gram
- Gold pound coin: EGP 30,160
The decline in local prices was attributed to the drop in global gold prices and the fluctuation of the US dollar exchange rate in the Egyptian market.
On the global stage, gold prices were pressured by the US Federal Reserve’s decision to cut interest rates by 25 basis points, bringing the range to 4.25%-4.50%. Federal Reserve Chair Jerome Powell’s comments about slowing the pace of rate cuts next year further contributed to the sharp decline.
In its final monetary policy meeting of 2024, the Federal Reserve projected only two interest rate cuts for 2025, signaling a cautious approach. This stance, coupled with uncertainties surrounding tariff policies, pushed the US dollar to its strongest level in 20 years, creating additional headwinds for gold.
Imbaby noted that gold prices stabilized toward the end of the week as the US Congress failed to pass a spending bill before the holiday recess. This development raised the prospect of a partial government shutdown, potentially affecting border enforcement, national parks, and the salaries of up to 2 million federal employees.
Additionally, the US Personal Consumption Expenditures (PCE) inflation report revealed a modest 0.1% rise in November, below market expectations of 0.2%. Annual PCE inflation accelerated slightly to 2.4% from 2.3% but remained under the anticipated 2.5%. Core PCE inflation also slowed to 0.1% from 0.3% in October, with the annual rate holding steady at 2.8%.
US economic growth figures provided mixed signals. The economy expanded at an annualized rate of 3.1% in the third quarter, while weekly jobless claims fell to 220,000, down from 242,000 the previous week, exceeding expectations.
Looking ahead, Imbaby expects central banks in emerging markets to maintain strong demand for gold as part of a broader strategy to diversify away from the US dollar.
He further pointed to geopolitical instability, rising inflation threats, and weak global economic growth as factors likely to sustain consumer demand, particularly in Asia.
Market participants are now awaiting key US economic data, including consumer confidence figures on Monday, durable goods orders and new home sales on Tuesday, and weekly jobless claims on Thursday.
Gold’s performance at the start of 2024 was buoyed by record-breaking central bank purchases and unprecedented consumer demand in Asia. As these trends continue, gold is expected to remain a focal point in both local and global markets.
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