Gold Prices Decline Following U.S.-Japan Trade Deal and Treasury Yield Recovery

Gold prices witnessed a sharp drop in both local and international markets by mid-day trading on Wednesday, as a wave of profit-taking followed the yellow metal's climb to a five-week high. The improved risk appetite in global markets also weighed on precious metals, traditionally considered safe-haven assets.

In Egypt, the price of 21-karat gold fell by EGP 30 to record EGP 4,680 per gram. Meanwhile, the international ounce price lost approximately $42, dropping to $3,390.

The price of 24-karat gold reached EGP 5,349 per gram, while 18-karat gold recorded EGP 4,011. The price of the gold pound fell to EGP 37,440.

Yesterday, prices had closed with local gains of EGP 25. The 21-karat gold started the day at EGP 4,685 and ended at EGP 4,710, while the ounce surged from $3,399 to $3,432.

U.S.-Japan Trade Deal Lifts Market Sentiment

Investor risk appetite rose significantly after the United States and Japan announced a historic trade agreement late Tuesday. U.S. President Donald Trump described it as “the largest ever.” The deal includes a 15% tariff on Japanese car imports to the U.S. and the establishment of a $550 billion Japanese investment fund to be deployed within the United States.

Global Markets: Stable Dollar, Lower Oil Prices

At the same time, the U.S. dollar saw modest gains, and yields on 10-year Treasury bonds rebounded from a two-week low—raising the opportunity cost of holding non-yielding assets like gold.

Meanwhile, U.S. Treasury Secretary Scott Bissonnette announced that negotiators from the U.S. and China would meet next week in Stockholm to discuss an extension of the deadline to reach a new trade agreement. This announcement added further optimism to markets and reduced demand for safe-haven assets.

Fed Policy Uncertainty Lingers

Despite the improved risk appetite, uncertainty surrounding the Federal Reserve’s monetary policy continues to cast a shadow over global markets. President Trump intensified his pressure on the Fed, renewing his call for interest rate cuts and directly demanding the resignation of Fed Chair Jerome Powell. He also urged the Treasury Secretary to launch a comprehensive review of the Fed’s policies—raising serious concerns over the institution's independence.

Markets now turn their attention to the upcoming Federal Reserve policy meeting scheduled for July 29–30, with expectations leaning toward a rate hold amid a lack of clear signals for imminent changes in monetary direction.