Gold prices in the local market recorded a notable weekly increase of 5% during the past week, in tandem with a 4.5% rise in ounce prices on the global exchanges, driven by stronger global demand, a weaker U.S. dollar, and declining liquidity toward the end of the year, according to a report by the iSagha platform.
Saeed Embaby, Executive Director of iSagha, said local gold prices rose by about EGP 285 over the week, with 21-karat gold opening trading at EGP 5,790 per gram and closing at EGP 6,075.
Globally, gold gained around $194 per ounce, starting the week at $4,339 and ending at $4,533, after touching a record high of $4,555 per ounce.
Embaby added that 24-karat gold traded at about EGP 6,943 per gram, 18-karat gold reached nearly EGP 5,207, while the gold pound was priced at around EGP 48,600.
The report noted that gold prices in the local market have posted cumulative gains of approximately EGP 2,335 since the beginning of 2025, representing growth of nearly 63%. Globally, gold prices rose by about $1,909 per ounce, equivalent to a 73% increase, marking gold’s strongest annual performance since 1979. This robust performance has been attributed to a sharp rise in central bank purchases aimed at reducing reliance on the U.S. dollar, alongside elevated global inflation and a shift by central banks toward interest rate cuts.
According to the report, gold reached unprecedented record levels in the final days of 2025, supported by sustained strong demand for precious metals, growing expectations of monetary easing by the U.S. Federal Reserve, a weaker dollar, heightened geopolitical tensions, and strong investment inflows—factors that also propelled silver to significant gains in the final week of the year.
The weakening dollar helped reduce the opportunity cost of holding gold, while ongoing geopolitical risks maintained strong demand. Meanwhile, thinner trading volumes during year-end holidays—particularly in Asia-Pacific markets—amplified price volatility.
Continued central bank buying, along with renewed interest in gold-backed exchange-traded funds (ETFs), further reinforced the current rally, as policymakers diversify reserves and investors seek hedges against risk and equity market volatility.
Gold traditionally benefits from declining real yields and a weaker U.S. dollar. Recent Federal Reserve rate cuts and forward guidance have lowered rate expectations, reducing the cost of holding non-yielding assets such as gold and supporting gains through the holiday period.
In this context, Goldman Sachs sees gold as the best investment bet among commodities in 2026, with prices potentially exceeding $4,900 per ounce, particularly if portfolio diversification broadens to include retail investors alongside central banks.
The bank expects strong central bank demand to remain the primary driver of gold prices, forecasting average purchases of around 70 tons per month in 2026, supported by rising geopolitical risks and the desire—especially among emerging markets—to reduce dependence on the U.S. dollar.
Goldman Sachs also noted that an anticipated 50-basis-point cut in U.S. interest rates, combined with a weaker dollar and lower real yields, enhances gold’s appeal as a hedge amid escalating geopolitical and technological competition between the United States and China.
The bank added that retail investor participation remains relatively limited, as gold ETFs still represent a small share of investment portfolios, leaving room for an additional wave of demand that could push prices to new record highs.
According to Goldman Sachs estimates, gold could see a temporary pullback toward $4,200 per ounce in the first quarter of 2026 before resuming its upward trajectory and potentially reaching $4,900 by year-end.
On the macroeconomic front, the artificial intelligence sector is expected to boost productivity and dominate economic activity, potentially helping the U.S. economy avoid a recession next year. However, fiscal concerns, questions over Federal Reserve independence, and the global shift away from the dollar are likely to weigh on the U.S. currency in 2026.
In this regard, economists at Wells Fargo believe the U.S. economy will remain the main engine of global growth in 2026, which could lend the dollar some support and lead to a modest rise by year-end, with the dollar index expected to trade between 98 and 102 points.
Conversely, some economists argue that U.S. economic strength may not be sufficient to sustain the dollar amid rate cuts and ongoing global diversification trends. They expect the dollar index to end the year down about 9%, below the 100-point level, particularly after the Federal Reserve cut rates by around 75 basis points in the second half of 2025. Markets, according to the CME FedWatch tool, are pricing in three additional rate cuts next year.
The dollar’s weak performance has strongly supported precious metals, with gold prices rising more than 65% and silver gaining over 100% over the past twelve months.
Analysts believe the current environment—marked by lower interest rates and large government deficits—limits the U.S. economy’s ability to withstand high borrowing costs, placing additional pressure on the dollar.
Under these conditions, even if economic growth continues, the Federal Reserve is likely to maintain an accommodative monetary policy stance, which could keep inflationary pressures elevated and real yields low, further enhancing gold’s appeal as a monetary and defensive asset, particularly amid growing concerns about a potential U.S. financial crisis.
Market analysts also expect further depreciation of the dollar due to risks associated with unsustainable U.S. government debt, arguing that the dollar remains overvalued relative to its fair value and that reassessments of U.S. fiscal conditions could weigh on its relative economic growth.
In addition, some analysts believe rising political risks threatening the independence of the Federal Reserve represent an additional burden on the dollar in 2026, especially with the approaching end of Chair Jerome Powell’s term in May and expectations of new leadership potentially favoring aggressive rate cuts.
By contrast, Bank of America said continued strong momentum toward rate cuts is not guaranteed if economic activity remains robust and inflation stays elevated. Mark Cabana, Head of U.S. Rates Strategy at the bank, noted that speculation over sweeping changes within the Federal Reserve persists, but most investors do not yet expect a clear majority in favor of sharply lower rates.
More broadly, expectations are growing that ongoing global diversification away from the dollar will erode its status as the world’s primary reserve currency—a trend that has benefited gold, and more recently silver, since 2022, as many countries have increased their holdings of precious metals.
Since then, central banks have continued to purchase around 1,000 tons of gold annually, with expectations of a slight slowdown this year to between 750 and 900 tons, while maintaining similar levels in 2026, supporting sustained strong demand for gold over the medium term.
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