Gold Surges as BRICS Eyes Dollar Alternative

Gold prices increased in local markets on Wednesday, with global markets also seeing gains, despite the strength of the US dollar.

This rise was driven by escalating tensions in the Middle East and anticipation surrounding the outcomes of the BRICS summit.

Saeed Embabi, CEO of the online gold and jewelry trading platform "iSagha," reported that gold prices in local markets increased by EGP 10 compared to Tuesday's closing prices.

The price of 21-karat gold reached EGP 3,750 per gram, while global gold prices rose by $5, bringing the ounce price to $2,753.

Embabi further noted that 24-karat gold was priced at 4,286 EGP per gram, 18-karat gold at 3,214 EGP, and 14-karat gold at 2,500 EGP. The price of a gold pound stood at 30,000 EGP.

Gold's rise in the global market has reached record levels, with the ounce touching $2,758. This surge is primarily driven by increased investment in safe-haven assets like gold, spurred by the ongoing conflict in the Middle East and growing uncertainty surrounding the upcoming US elections.

The conflict in the Middle East has intensified investors’ appetite for gold as a safe haven, further supporting its price rise.

In addition, the market is closely watching the results of the BRICS summit, which began on Tuesday. Key members of the group, particularly Russia, are exploring alternatives to the US dollar's dominance, including promoting a gold-backed currency as a viable option.

International economist Mohamed El-Erian, in an article published in the Financial Times on Monday, remarked on the unusual trajectory of gold prices over the past year. He noted that gold has set record highs, seemingly decoupled from traditional influences like interest rates, inflation, and the strength of the dollar. Moreover, its consistent growth contrasts with the volatility seen in key geopolitical events.

El-Erian highlighted that the current surge in gold prices is not only extraordinary from an economic and financial perspective, but also goes beyond the typical geopolitical influences.

He added that the development of alternative international financial systems, such as those being pursued by BRICS nations, could potentially fragment the global system, weakening the dominance of the US dollar and the American financial framework. This shift could ultimately impact the financial influence of the United States.

As the BRICS summit continues and tensions persist globally, gold is expected to remain a key focus for investors seeking stability amidst the uncertainty.