Gold Jumps to a New Historical Level Amid Escalating Trade Tensions and Expectations of a US Interest Rate Cut

Global gold prices continued their record ascent during today's Wednesday trading, with the ounce surpassing the $4200 barrier for the first time in its history. This surge was fueled by escalating trade tensions between the United States and China, increased bets on a US interest rate cut, and continued investor flows towards safe havens amidst fears of a prolonged US government shutdown and a slowdown in global economic activity, according to a report by the "iSagha" platform, which specializes in gold and jewelry trading.

Saeed Embaby, the Executive Director of the platform, stated that gold prices in local markets rose by about EGP 85 during today's trading compared to yesterday's close. The price of a gram of 21-karat gold reached EGP 5640, while the ounce rose by approximately $53 to record $4202, after having touched the $4217 level.

Saeed Embaby confirmed that gold prices continued to record unprecedented figures during today's trading. The 21-karat gold gram rose by about EGP 85 compared to yesterday's closing, reaching EGP 5640. Simultaneously, the global ounce climbed by about $53 to register $4202, after hitting the $4217 level in early trading.

He added that the 24-karat price reached approximately EGP 6446, and the 18-karat price was EGP 4834, while the Gold Pound (Gineh Dahab) stabilized at EGP 45120.

Gold prices in local markets had risen by about EGP 55 during yesterday's Tuesday trading, where the 21-karat gold gram opened trading at EGP 5500 and closed at EGP 5555. Meanwhile, the ounce rose by about $39, opening trading at $4110 and closing at $4149.

Embaby pointed out that local markets were directly affected by the rise in global prices and the state of anticipation dominating investors as the US Federal Reserve meeting approaches.

He further noted that the consecutive global price hikes were quickly reflected in the Egyptian market, especially with the increase in investment demand and the decrease in the supply of raw gold among traders.

Globally, gold prices rose amid indications that the Federal Reserve is heading towards two additional interest rate cuts before the end of the year, which reduces the dollar's attractiveness and boosts demand for the precious metal. The escalating trade tension between Washington and Beijing also contributed to supporting gold, after US President Donald Trump threatened to impose new trade restrictions on Chinese imports, and Beijing responded with countermeasures that included tariffs on some US goods and restrictions on rare earth metal exports, recalling the atmosphere of the trade war that shook markets in 2019.

The "Reuters" news agency reported that investors are flocking heavily to gold as the most prominent safe haven against economic and political turmoil. Data from the World Gold Council indicates that central bank purchases remain at strong levels, with net purchases registering about 166 tons during the second quarter of the current year, and recovery continuing in August, which reinforces the foundation for official demand for the metal.

The historical rise in gold coincided with the decline of the US dollar index for the second consecutive day, after traders lowered their bets on interest rates remaining high for a long period.

The "CME FedWatch" tool indicates that markets are now pricing in a probability exceeding 90% for a 25 basis point rate cut in December. In contrast, Federal Reserve Chairman Jerome Powell did not offer clear signals regarding the path of monetary policy, yet his comments about the weak labor market increased the likelihood of the Fed moving towards further monetary easing.

Analysts believe that gold surpassing the $4200 level constitutes a new turning point in its historical trajectory, and the factors supporting the rise are still present. This is especially true as Bank of America raised its gold price forecast to $5000 per ounce by 2026, supported by the wave of global investment demand and the expansion of exchange-traded fund holdings. Given the continued economic uncertainty, experts expect gold to remain on an upward path in the medium term, with the potential to record higher levels if geopolitical tensions and the dollar's weakness persist during the last quarter of the year.