Gold Prices Decline Ahead of Fed Meeting Minutes Release

Gold prices declined in local markets during Wednesday's trading and the ounce on the global stock market fell.

This decrease was impacted by the US dollar's strengthening and the markets awaiting the release of minutes from the latest Federal Reserve meeting for signals on the date of reducing interest rates.

Said Imbabi, Executive Director of the “i-Sagha”, said that gold prices fell in local markets by EGP 20 during the transactions compared to the end of yesterday’s trading, in which the gram of 21-karat gold recorded EGP 3470 and an ounce on the global stock exchange declined by $7 to record $2532, reaching its highest level ever in trading on Tuesday.

He added that the 24-karat gold reached EGP 3966, 18-karat registered EGP 2974, 14-karat gold sold at EGP 2314, and the gold pound hit EGP 27760.

On the other hand, gold prices rose in the local markets by EGP 10 during yesterday's trading.

The 21-karat opened trading at EGP 3470, touched EGP 3490, and closed at EGP 3480. Meanwhile, the ounce rose on the global stock market by $9, with transactions beginning at $2506, touching touched its highest level ever at $ 2532, and concluding at $2515.

Gold prices on the global stock exchange have risen by $446 or 21.6% since the beginning of this year as geopolitical tensions and uncertainty caused by the upcoming US presidential elections and a potential interest rate cut helped push gold to historic levels.

Imbabi explained that the gap between the price of gold in local markets and the global price has decreased by EGP 20, impacted by the market raising the difference between the two prices by EGP 100 in the past period.

He added that the decline in demand and the shortage of supply of raw gold prompted traders to limit price increases and reduce the difference between the selling and the buying price.

Imbabi predicted the markets would witness a large wave of selling by citizens and gold, especially those who bought at EGP 4,000, a category that has been locked up for 8 months.

He pointed out that gold prices in local markets are subject to increase with the rise in prices on the global stock exchange, but noted that a potential deal between Egypt and Saudi Arabia may strengthen the pound and push the dollar to decline temporarily, leading to a decline in the local gold price in the short term, which will be supported by potential global increases amid increasing expectations of the US Federal Reserve cutting interest rates.

Imbabi explained that gold prices on the global stock exchange rose to historic levels during Tuesday's trading to touch their highest level ever impacted by the decline of the dollar and US Treasury bond yields amid readiness for the US Federal Reserve to cut interest rates in September.

He added that increasing expectations of the US Federal Reserve cutting interest rates at the September meeting pushed the dollar to its lowest levels since last January and boosted global demand for gold.

Imbabi pointed out that most international bank reports expect gold to rise to new record levels next year, with the current year ending at $2,600.

In a related context, markets are awaiting the Federal Open Market Committee meeting for July, due on Wednesday.

The markets are also anticipating Jerome Powell, Chairman of the US Federal Reserve addressing a gathering of central bankers this Friday at a symposium in Jackson Hole, for hints about the possibility of cutting interest rates further in September.