Gold Prices Decline in Local Markets, 21-Karat at EGP 3725

Gold prices in local markets witnessed a slight decline during Wednesday's trading, while global gold prices experienced a modest increase amidst ongoing uncertainty regarding U.S. labor market and inflation data in 2025, according to a report by the "iSagha" platform.

Saeed Embabi, CEO of the “iSagha” platform said that gold prices witnessed a decline by EGP 15 in the local markets during today’s trading, as a gram of 21 karat gold recorded EGP 3725, while an ounce declined to $2615.

He added that a gram of 24 karat gold recorded EGP 4257, a gram of 18 karat gold recorded about EGP 3193, and a pound of gold recorded about EGP 29800.

Gold saw a 27% increase on the global market in 2024, marked by fluctuations and a strong rise from February to October.

Embabi noted that gold prices rose slightly during today's trading, recovering some losses following hawkish remarks from the U.S. Federal Reserve on December 17. This comes amidst uncertainty about U.S. labor and inflation data, which will significantly influence the Fed's monetary policy direction in 2025.

He added that the Federal Reserve's 25-basis-point rate cut signals a cautious approach to easing monetary policy, reflecting confidence in the economy. While headline inflation is nearing the Fed's 2% target, core inflation rose to 2.8% in October, indicating underlying pressures that may delay further rate cuts.

The Federal Reserve's updated projections suggest only a 50-basis-point rate cut in 2025, down from the previously expected 100 basis points. This more restrictive stance has bolstered the U.S. dollar and weakened gold.

Embabi highlighted that gold prices are likely to experience volatility in the first quarter of 2025, influenced by labor and inflation data. Gold's resilience, despite a strong dollar and high-interest rates, indicates that investors still view it as a hedge against economic and geopolitical uncertainties.

Long-term gold price forecasts remain optimistic, driven by persistent inflation concerns, ongoing geopolitical instability, and potential shifts in U.S. policy under the new Trump administration. Limited Federal Reserve rate cuts are expected to support gold demand as a hedge against uncertainty and currency devaluation.

Embabi pointed out that the Federal Reserve's stance indicates modest interest rate cuts by June and September 2025, which may limit gold's upside, especially if the dollar remains strong. However, gold has historically shown resilience during restrictive Fed policies, and investors may gradually accumulate positions during dips, although some may refrain from aggressive moves until clearer signals emerge from the Fed.

Central banks played a key role in gold's rise in 2024, with rate cuts globally boosting demand. Central banks, which slowed gold purchases in late 2024, may return to the market as countries continue to diversify investments away from the dollar.