Gold Prices Decline, Ending Last Week’s Gains

Gold prices saw a decline on Monday, marking the end of a four-day rally that drove prices higher last week. Both local and global markets saw prices retreat as expectations grew for tighter monetary policy from the U.S. Federal Reserve. The Fed’s strategy is being shaped by robust labor market data and its ongoing fight against inflation.

In local markets, the price of 21-karat gold, the most commonly traded grade in Egypt, dropped by 30 EGP to settle at 3,770 EGP per gram. Similarly, global gold prices fell by $17, with an ounce now priced at $2,672. The downturn reflects market adjustments to expectations that the Federal Reserve will maintain high interest rates longer than previously anticipated.

This decline comes after a strong performance last week, during which local gold prices rose by 0.9%, adding 35 EGP per gram. The price of 21-karat gold opened last week at 3,765 EGP and closed at 3,800 EGP. On the global stage, gold prices gained 1.9% over the same period, with the price of an ounce climbing from $2,640 to $2,689.

The recent pullback in gold prices was triggered by the release of U.S. non-farm payroll data, which showed that the US economy added 256,000 jobs in December, well above the forecast of 160,000. The unemployment rate also dropped to 4.1%, while average hourly earnings saw a slight decline from 4% to 3.9%. These figures have bolstered the case for the Federal Reserve to continue its tight monetary policy, delaying any cuts to interest rates until later in 2025.

The prospect of higher interest rates often weighs on gold prices, as higher yields on other investments make gold—a non-yielding asset—less attractive. Despite this, gold remains a popular safe-haven asset, particularly during times of economic uncertainty. Earlier this year, concerns about U.S. economic policy and volatility in stock markets drove demand for gold, pushing prices to record highs.