Gold Posts Strong Weekly Gains Driven by Geopolitical Risks and Interest Rate Cut Expectations

Gold prices in local markets recorded a 2.3% increase over the past week, alongside a 2.4% rise in the global ounce on international exchanges. The gains were driven by growing economic uncertainty and ongoing geopolitical tensions related to the Russia–Ukraine war, according to a report by the Ai Sagha platform.

Saeed Embabi, the platform’s CEO, stated that domestic gold prices rose by approximately EGP 130 during the week, with the 21-carat gram opening at EGP 5,615 and closing at EGP 5,745. Globally, the ounce gained around $100, opening at $4,199 and closing near $4,299.

The price of 24-carat gold reached EGP 6,566 per gram, 18-carat at EGP 4,924 per gram, and the gold pound stood at EGP 45,960.

Since the start of the year, local gold prices have jumped by about EGP 2,005, a 54% increase, while the global ounce rose by approximately $1,675, or 64%, reaching nearly 50 new record levels and marking the best annual performance for gold since 1979.

Despite these gains, the report noted that gold’s performance remains relatively lower than silver, which, despite a recent retreat from its peak above $64.66 per ounce, posted an impressive 115% annual increase, trading at unprecedented historical levels.

Analysts expect the Federal Reserve to continue cutting interest rates in the upcoming period, even amid persistent inflationary pressures. This scenario reduces real yields and lowers the opportunity cost of holding gold as a non-yielding asset.

Economic and geopolitical uncertainty is expected to curb GDP growth next year. While AI-driven economic support is projected to sustain equity markets until 2026, rising risks enhance gold’s attractiveness as a key portfolio diversification tool.

Although demand for gold has been strong and unprecedented this year, its holdings still represent a limited share of total global financial assets, leaving room for additional investment inflows in the future.

Some analysts are targeting $5,000 per ounce for gold next year, while silver is expected to trade between $75 and $80 per ounce, with more optimistic scenarios suggesting a potential rise to $100 per ounce.

Gold prices continue to benefit from uncertainty surrounding the U.S. monetary policy path and weak economic data. Despite varied statements from Federal Reserve officials, some members expressed concern about persistent inflation, particularly given limited data, notably the Consumer Price Index.

The weaker-than-expected weekly jobless claims report, showing a rise in applications, reinforced this trend. Fed Chair Jerome Powell also noted that some data could be “misleading” due to the U.S. government shutdown.

Geopolitically, peace talks between Russia and Ukraine remain stalled, amid White House dissatisfaction with the slow pace of negotiations, and President Donald Trump’s disappointment over Ukrainian President Volodymyr Zelensky not signing the U.S. peace plan.

Goldman Sachs highlighted strong potential for further gains in gold prices, beyond its current $4,900 per ounce forecast by the end of 2026, driven by increased investor demand to raise gold allocations, low current positioning, and expanding investment diversification trends.

The bank’s analysts pointed out that the global gold market remains relatively small compared to other asset markets, meaning even minor shifts in investment flows can trigger sharp price increases, describing gold as the best long-term investment recommendation in the commodities sector.

Key drivers for gold’s rise include structural increases in central bank purchases, the cycle of U.S. interest rate cuts, and strong support from both central bank and private-sector demand.

According to Goldman Sachs estimates, the spot gold price has risen approximately 60% year-to-date, fueled by central bank purchases, rising demand for gold-backed ETFs, a weakening U.S. dollar, and growing investor appetite for hedging geopolitical and trade risks.

With continued global uncertainty, gold is increasingly seen as a strategic hedge against economic and geopolitical disruptions, reflecting what observers describe as a structural shift in global capital flows toward the precious metal.