Gold prices in the local market fell by approximately 2.7% during May, while global gold prices dipped by 0.3%, driven by U.S. economic volatility that has left markets in a state of uncertainty.
According to data, local gold prices dropped by EGP 130 over the course of May, with 21-karat gold opening the month at EGP 4,730 per gram and closing at EGP 4,600. On the global stage, the ounce lost $10, declining from $3,300 to $3,290 by the end of the month.
On a weekly basis, local gold prices dropped by 2.3% or EGP 110 during the week ending Saturday evening. The price of 21-karat gold opened the week at EGP 4,710 per gram and closed at EGP 4,600. Meanwhile, global gold prices fell 2% or $68 per ounce, from $3,358 to $3,290.
As of the latest update, 24-karat gold is priced at EGP 5,257 per gram, 18-karat at EGP 3,943, 14-karat at EGP 3,067, and the gold pound at approximately EGP 36,800.
May witnessed notable fluctuations, albeit less intense than those in April, which saw the highest monthly volatility in gold prices in 25 years.
Global gold prices recorded a sharp decline over the past week amid a climate of caution and anticipation in the markets, despite persistent geopolitical and economic factors that typically support gold as a safe-haven asset.
Markets are increasingly struggling to navigate the rapid swings tied to U.S. policies, particularly in the area of trade tensions. Calming statements about trade disputes are often followed by new threats, boosting demand for gold as a haven.
Gold is expected to continue trading within a volatile range between $3,100 and $3,400 per ounce due to ongoing economic and geopolitical uncertainties.
These fluctuations reflect the extent of chaos in U.S. policymaking. Prices may remain relatively stagnant until there is clarity regarding the impact of President Trump's policies, particularly concerning the trade war.
Despite short-term volatility undermining upward momentum, gold maintains strong fundamentals that support a longer-term bullish outlook.
The significant rise in gold prices over the past two years has been fueled by a mix of economic and geopolitical factors, including inflation concerns, monetary policy shifts, and uncertainty over tariffs—all contributing to fears of stagflation.
Fundamental Drivers Still Favor Gold
U.S. Trade Policies: President Donald Trump’s approach to managing trade disputes and the so-called "weaponization of the dollar" has prompted many central banks to reduce their reliance on the U.S. currency.
Gold as a Safe Asset: In response to these shifts, central banks worldwide continue to boost their gold reserves to hedge against geopolitical and economic risks.
Gold’s Independence: Gold remains the only monetary asset that does not rely on a third party, reinforcing its status as a trusted hedge during times of crisis.
Economic Indicators Confirm a Slowdown
Economic Contraction: Revised U.S. GDP data showed a contraction of 0.2% in Q1 2025, slightly better than the initial estimate of -0.3%.
Sluggish Consumption: Consumer spending growth slowed to 1.2%, down from an initial 1.8%, signaling weakening consumer confidence.
Personal Income and Spending Data: Personal income rose by 0.8% in April, while spending increased by just 0.2%. The savings rate climbed to 4.9%, the highest in a year, reflecting cautious consumer behavior.
Trade War Back in Focus
The political and trade outlook remains clouded. Despite court rulings on tariffs and continued discussions around a major tax bill that could increase U.S. spending and deficits, markets are prioritizing economic data.
A recent federal court decision to overturn tariffs imposed by Trump last month sparked renewed volatility and selling pressure in the gold market, intensifying uncertainty over the future of the trade dispute and escalating global tensions.
Despite May's relative pullback, core bullish factors remain in place—from political instability in the U.S. to signs of a global economic slowdown—especially as central banks continue accumulating gold.
Looking Ahead: Key Data in Focus
Markets now await key economic data in the coming week that could reshape expectations for Federal Reserve policy. Key releases include the ISM Manufacturing Index (Monday), job openings data (Tuesday), the European Central Bank meeting, U.S. weekly jobless claims (Thursday), and the Non-Farm Payrolls report (Friday).
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