Gold Prices Affected by US Fed

Gold prices rose in local markets during Thursday's trading, amid relative stability for the ounce on the global stock market due to the strong dollar and the rise in US Treasury bond yields, which pressured gold.

This came at a time when markets anticipated a set of US economic data and more speeches by US Federal Reserve policymakers in search of new policy signals.

Said Imbabi, Executive Director of the “i-Sagha”, said that gold prices rose in local markets by EGP 5 during the transactions compared to the end of yesterday’s trading, in which the gram of 21-karat gold recorded EGP 3115 and an ounce stabilized at 2336.

He added that the 24-karat gold reached EGP 3560, 18-karat registered EGP 2670, 14-karat gold sold at EGP 2077, and the gold pound hit EGP 24920.

On the other hand, gold prices declined by EGP 30 during yesterday's trading. The 21-karat opened trading at EGP 3140 and closed at EGP 3,110. Meanwhile, the ounce rose on the global stock market by $22, with transactions beginning at $2358, and concluding at $2336.

Imbabi explained that gold prices on the global stock market are still under some pressure, with diminishing expectations that the US Federal Reserve will cut interest rates during the current year.

He added the tough remarks by members of the US Federal Reserve and the concerns of US monetary policymakers over the continuation of inflation led to a reduction in the possibility of cutting interest rates, which strengthened the strength of the dollar and US Treasury bond yields.

Imbabi pointed out that central bank purchases and the escalation of geopolitical tensions in the Middle East region still represent a gold outlet, as it is considered a safe haven amid wars and economic events, which boosts the rise in demand.

The statements by Minneapolis Federal Reserve Bank President Neel Kashkari, who did not rule out raising interest rates again, also had a strong impact on market sentiment and led to a rise in bond yields.

This week's auction of 2-, 5- and 7-year US Treasury bonds, with a total value of $183 billion, also faced weak demand, pushing yields to rise sharply over the past two days, amid investors' concern about ongoing inflationary pressures.

In a related context, the markets are awaiting on Thursday some important economic data, including US GDP data, weekly unemployment claims, and home sales data, in addition to statements by some members of the Federal Reserve.

Also on focus is the report of the core personal consumption expenditures index, A measure of inflation preferred by the bank to detect the magnitude of changes in consumer spending across a wide range of goods and services. 

The report is set to be released on Friday and is likely to shape the future policy decisions of the Federal Reserve.