Gold prices decline locally and globally under pressure from a stronger dollar and inflation concerns

Gold prices declined in both the local market and global exchanges during Monday’s trading, pressured by the rise of the U.S. dollar, which negatively affected the precious metal priced in the American currency. Meanwhile, higher energy costs have fueled inflation concerns and reduced expectations for near-term interest rate cuts, according to a report released by the iSagha platform.

Saeed Embabi, Executive Director of the platform, said local gold prices fell by about EGP 50 during Monday’s trading, bringing the price of 21-karat gold to EGP 7,450 per gram.

He added that 24-karat gold recorded around EGP 8,514 per gram, while 18-karat gold reached approximately EGP 6,386 per gram. The gold pound coin stood at about EGP 59,600.

The report noted that gold prices in the local market had already declined by about 4% during last week’s trading, equivalent to roughly EGP 300. The price of 21-karat gold opened the week at EGP 7,525 per gram and closed at EGP 7,225. Meanwhile, gold on the global market fell by about 2%, or $107, with the ounce starting the week at $5,279 and ending at $5,172.

According to the report, the local decline followed the drop in global gold prices, although the rise in the local exchange rate of the U.S. dollar—approaching EGP 53—limited the scale of losses in the domestic market.

The Egyptian pound continues to weaken against the U.S. dollar and is moving toward potentially record levels within the banking sector, affected by ongoing outflows of hot money and escalating geopolitical tensions in the region.

At the same time, the Egyptian economy is facing dual pressures from foreign currency shortages and rising global oil prices, placing additional strain on the country’s economic reform program.

Despite these challenges, the Egyptian pound delivered strong performance in 2025, rising by about 6.7% against the U.S. dollar. The gains were supported by record remittances from Egyptians working abroad and improved liquidity levels within the banking sector.

Globally, gold prices declined as the U.S. dollar strengthened, reaching its highest level in more than three months, which made gold more expensive for holders of other currencies.

U.S. 10-year Treasury yields also climbed to their highest level in a month, increasing the opportunity cost of holding gold, which does not generate interest.

Gold prices retreated despite ongoing market turmoil, as the sharp rise in oil prices strengthened the dollar and intensified inflation concerns, reducing expectations for near-term U.S. interest rate cuts.

Crude oil prices surged by more than 15% to exceed $110 per barrel, driven by the escalating U.S.–Israeli–Iranian conflict, which prompted some major Middle Eastern producers to reduce supplies amid fears of disruptions to shipments through the Strait of Hormuz.

The strong rally in gold over the past twelve months has largely been driven by expectations that the Federal Reserve would adopt a more accommodative monetary policy and begin cutting interest rates. However, with oil prices approaching $100 per barrel and raising inflation risks, rate cuts are no longer considered a certainty, prompting markets to reprice gold accordingly.

According to the FedWatch Tool of the CME Group, investors expect the Federal Reserve to keep interest rates unchanged at the conclusion of its two-day meeting on March 18. The probability of rates remaining unchanged through the June meeting has risen to more than 51%, compared with less than 43% last week before the conflict began.

Gold, which does not yield interest, typically performs better in a low-interest-rate environment.

During the first half of the European trading session, gold held relatively steady slightly below $5,100 per ounce, although it remained above the four-day low recorded earlier on Monday.

Investors remain concerned about the impact of the ongoing conflict in the Middle East on crude oil prices and the global economy. These concerns have attracted some safe-haven buying in gold, particularly as it stays above the key psychological level of $5,000 per ounce.

At the same time, geopolitical developments continue to heighten tensions in the region, with fears growing that any disruption to shipping through the Strait of Hormuz—one of the world’s most critical oil and gas transit routes—could trigger a major energy shock.

The recent surge in crude oil prices has further fueled global inflation concerns and reduced the likelihood of near-term interest rate cuts by the Federal Reserve. This has supported the U.S. dollar and limited further gains in gold, prompting investors to remain cautious in their trading positions.