Gold prices decline locally and globally ahead of Fed decision

Gold prices fell in both local and global markets during Wednesday’s trading session, as investors adopt a cautious stance ahead of the U.S. Federal Reserve’s interest rate decision, widely expected to result in a hold later today.

Saeed Imbaby, CEO of the iSagha platform, said that gold prices in the local market declined by حوالي 45 Egyptian pounds, with 21-karat gold falling to around EGP 7,260 per gram. Meanwhile, the global ounce dropped by $59 to سجل نحو $4,948.

He added that 24-karat gold reached approximately EGP 8,297 per gram, while 18-karat gold recorded about EGP 6,223 per gram. The gold pound stood at roughly EGP 58,080.

Globally, gold came under pressure as investors weighed the possibility that the Federal Reserve may maintain higher interest rates for a longer period, particularly amid rising energy prices, which are fueling renewed inflation concerns.

Analysts note that persistent strength in oil prices, driven by escalating geopolitical tensions in the Middle East, could push the Fed toward a more hawkish monetary stance. This, in turn, reduces the appeal of gold as a non-yielding asset compared to interest-bearing investments.

The backdrop comes as the Middle East conflict enters its third week, with intensifying exchanges between Iran and Israel and growing fears of broader escalation—especially with the continued disruption and near-closure of the Strait of Hormuz, a critical global energy route through which roughly 20% of oil supplies pass.

Although Brent crude prices edged slightly lower, they remain above $100 per barrel, supported by geopolitical risks, further exacerbating global inflationary pressures through higher transportation and energy costs.

While gold is traditionally viewed as a hedge against inflation and uncertainty, higher interest rates diminish its attractiveness by increasing the opportunity cost of holding the metal and boosting returns on alternative assets.

Markets are now closely watching Federal Reserve Chair Jerome Powell’s remarks following the policy announcement, seeking signals on the outlook for monetary policy through the remainder of 2026. Current expectations suggest a limited rate cut of just 25 basis points in September, with another potential cut in 2027.

Commodity strategists at ING noted that gold is trading within a narrow range, balancing support from geopolitical tensions against pressure from a stronger U.S. dollar and rising real yields.

They added that while safe-haven demand persists due to Middle East tensions and elevated energy prices, concerns that inflation pressures could delay Fed rate cuts have capped gold’s upside.

Despite a constructive medium-term outlook—supported by central bank purchases, diversification demand, and stagflation risks—analysts warn that prolonged conflict and sustained high interest rates could pose downside risks.

Gold has gained around 16% since the start of the year, with the recent pullback remaining relatively limited. Deeper corrections, they suggest, are likely to attract fresh buying interest.

For now, investors remain on the sidelines, awaiting clarity on both geopolitical developments and the Fed’s policy trajectory. Gold’s next move will largely depend on the central bank’s forward guidance and signals regarding interest rates.

Meanwhile, a series of monetary policy meetings by major central banks—including the Bank of England, European Central Bank, and Bank of Japan—are also in focus this week, adding to global market uncertainty.

Amid these dynamics, gold continues to trade in a tight range, with investors hesitant to take decisive positions until clearer signals emerge on U.S. monetary policy, inflation trends, and geopolitical risks.