Gold Loses EGP 30 as Local Dollar Exchange Rate Declines

Gold prices in the local market dropped on Monday despite global spot prices holding steady. The decline came as improved risk sentiment—following a trade agreement between the United States and the European Union—limited gains for the precious metal, while investors await this week’s U.S. Federal Reserve policy meeting.

Local gold prices fell by approximately EGP 30 compared to Saturday’s closing levels, with 21-karat gold reaching EGP 4,600 per gram, while the global spot price remained stable at $3,337 per ounce.

The price of 24-karat gold stood at EGP 5,257, 18-karat gold at EGP 3,943, and 14-karat gold at EGP 3,067, while a gold pound coin was priced at EGP 36,800.

Gold prices had already declined by about EGP 20 over the previous week, dropping from EGP 4,650 to EGP 4,630 per gram, in tandem with a modest 0.4% global decrease in spot prices from $3,350 to $3,337 per ounce.

This local market drop occurred despite the stability of global spot prices, largely due to a weaker domestic dollar exchange rate—one of three main factors influencing local gold prices, alongside international spot prices and supply-demand dynamics.

Globally, improved trade sentiment and a stronger U.S. dollar have reduced demand for safe-haven assets like gold. The signing of a trade agreement between Washington and Tokyo, as well as progress in negotiations with the EU, shifted investor focus. Markets are now anticipating the Federal Reserve’s decision, with expectations that interest rates will remain within the 4.25%–4.50% range, and a potential rate cut in September.

The preliminary U.S.–EU trade agreement helped ease fears of a broader trade war, setting tariffs at 15% instead of 30%. This boosted risk appetite, driving European equities to their highest levels in four months.

Meanwhile, U.S.–China talks in Stockholm aim to extend the trade truce for another 90 days, further improving market sentiment and diminishing gold’s appeal as a safe haven.

Despite these factors weighing on gold, the possibility of U.S. rate cuts later this year could provide some support, as lower real yields typically enhance gold’s attractiveness.

In China, gold consumption fell by 3.5% in the first half of 2025, with jewelry demand plunging by 26% due to price sensitivity and volatility, while investment demand rose by 24%, reflecting a global shift toward financial rather than traditional consumer-driven gold demand.

The gold market currently appears to be in a phase of relative stability after a sharp rally that peaked in April, driven by geopolitical tensions and tariffs. However, easing trade risks and weaker physical demand in key markets like India—where high prices have dampened buying—have slowed momentum.

Central bank purchases continue to provide some support to the market, though they declined in the first quarter compared to last year. At the same time, exchange-traded funds (ETFs) are seeing stronger inflows.

Sustained upward momentum in gold prices would require extraordinary catalysts such as a severe global economic slowdown, renewed geopolitical escalation, or a sharp U.S. dollar decline. Conversely, improving economic conditions and reduced risks may push investors toward higher-yielding assets, adding pressure on gold.

Next week, markets will closely watch key U.S. economic releases, including the Federal Reserve’s July 30 policy decision, preliminary Q2 GDP data, core personal consumption expenditures (PCE) figures, and nonfarm payroll numbers.