Gold Prices Decline, 21-Karat at EGP 3740

Gold prices in local markets continued their downward trend on Tuesday, driven by a drop in global ounce prices due to sustained dollar buying, rising U.S. bond yields, and expectations of a slower pace of rate cuts by the U.S. Federal Reserve. The demand for safe-haven assets also declined.

Saeed Embabi, CEO of the “iSagha” platform said that gold prices witnessed a decline by EGP 45 in the local markets during today’s trading, as a gram of 21 karat gold recorded EGP 3740, while an ounce declined to $2660.

He added that a gram of 24 karat gold recorded EGP 4160, a gram of 18 karat gold recorded about EGP 3120, and a pound of gold recorded about EGP 29120.

Embabi pointed out that local gold prices have dropped by a total of 120 EGP since the beginning of the week on Monday.

He explained that global gold prices have continued to decline, falling below $2600 for the first time since September 20 due to continued dollar buying and rising U.S. bond yields. The U.S. dollar reached its highest level in over four months, putting downward pressure on gold, as markets speculate that the economic policies of the newly elected President Donald Trump will support the dollar.

Embabi further explained that Trump’s anticipated expansionary policies are expected to stimulate economic growth and boost inflation, which may, in turn, limit the Fed's ability to apply an easy monetary policy. This, in turn, strengthens the dollar and U.S. Treasury yields, reducing demand for gold.

Trump’s pledges to impose tariffs on imports, reduce taxes, and deport millions of illegal immigrants are expected to raise prices and increase inflation in the U.S., possibly leading the Fed to slow the pace of rate cuts as it attempts to combat inflation. Relatively higher interest rates negatively impact gold.

Embabi also noted that Trump’s economic policies may heighten global trade tensions and exert pressure on global markets, which could support gold prices, especially as geopolitical tensions persist.

Last week, the Federal Reserve cut interest rates by 25 basis points and indicated plans for further monetary easing.

Minneapolis Fed President Neel Kashkari said that the central bank wants to be confident and needs more evidence that inflation will return to its 2% target before deciding on further rate cuts.Markets are closely watching the release of U.S. consumer inflation data on Wednesday, the U.S. Producer Price Index on Thursday, U.S. retail sales data on Friday, and speeches from several influential Fed officials, including Fed Chair Jerome Powell later this week, for hints on the future of interest rates amid speculation that the Fed may delay its easing cycle.