Gold prices declined in local markets and on the global exchange during Thursday’s trading, amid renewed concerns over the continuation of the war in the Middle East after Donald Trump’s ceasefire proposal for a one-month truce and settlement plan was rejected by Iran.
gold prices fell by about 65 Egyptian pounds, with 21-karat gold recording 6,785 pounds per gram, while the ounce declined by about $84 to reach $4,424.
24-karat gold recorded around 7,754 pounds per gram, 18-karat gold reached about 5,816 pounds per gram, and the gold pound coin recorded approximately 54,280 pounds.
Gold declines after recent gains
Gold prices fell on Thursday after two consecutive sessions of gains, as investors awaited clearer signals on progress in de-escalation efforts in the Middle East, which could significantly impact the global financial and monetary landscape.
The precious metal came under pressure after a strong rally over the past three days, as fears resurfaced about the continuation of the war in the Middle East following Iran’s rejection of the U.S. ceasefire proposal and the 15-point settlement plan.
President Donald Trump stated that Iran is seeking to reach an agreement to end nearly four weeks of fighting, contradicting statements from the Iranian foreign minister, who said that Iran is reviewing a U.S. proposal but does not intend to enter negotiations to end the conflict.
Major market moves are expected early next week, when it becomes clear whether the United States will launch a ground invasion against Iran over the weekend.
Oil rises above $100
Brent crude futures rose above $100 per barrel amid fears that continued fighting in the Middle East could further disrupt global energy supplies, especially after the effective closure of the Strait of Hormuz, through which about one-fifth of the world’s oil and liquefied natural gas supply passes.
Higher oil prices typically increase inflation by raising transportation and manufacturing costs. Although rising inflation usually supports gold as a hedge, higher interest rates negatively impact demand for gold because it is a non-yielding asset.
Interest rate expectations pressure gold
According to the FedWatch tool, markets currently see little chance of interest rate cuts by the Federal Reserve this year, whereas before the conflict markets were expecting at least two rate cuts.
In theory, escalating geopolitical tensions should increase demand for safe-haven assets such as gold. However, the precious metal is facing negative pressure amid concerns that ongoing conflicts in the Middle East will push oil prices higher, raising inflation expectations and limiting central banks’ ability to ease monetary policy, which keeps interest rates higher for longer.
Conditions to end the war
Iranian officials stated that the U.S. proposal to end the war included restrictions on Iran’s nuclear program and preventing uranium enrichment within Iran.
In return, Iran presented conditions to end the war, including:
Closing all U.S. military bases in the Gulf
Compensation for damage to Iranian infrastructure
Lifting all economic sanctions
Allowing Iran to maintain its missile program without restrictions
These developments indicate continued geopolitical uncertainty, which could lead to strong volatility in gold, oil, and currency markets in the coming period.
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