Gold Prices Fall 1.3% Globally Over the Week as Strong U.S. Dollar Caps Gains

Gold prices in Egypt declined during Saturday's trading, coinciding with the weekend closure of international markets, after bullion posted weekly losses of more than 1.3%. The decline was driven by the continued strength of the U.S. dollar and persistent market expectations that the Federal Reserve will maintain a restrictive monetary policy. However, the stability of the Egyptian pound's exchange rate against the dollar and sustained investment demand prevented the global decline from being fully reflected in the domestic market.

The price of 21-karat gold rose by approximately EGP 30 compared with Friday's close, reaching around EGP 5,860 per gram, while spot gold lost roughly $56 over the week to finish near $4,120 per ounce.

Meanwhile, 24-karat gold traded at EGP 6,697 per gram, 18-karat gold reached EGP 5,023 per gram, and the gold pound coin was priced at approximately EGP 46,880.

On Friday, local gold prices had declined by around EGP 10, with 21-karat gold opening at EGP 5,840 and closing at EGP 5,830 per gram, while the international gold price settled at $4,120 per ounce after slipping by about $3.

The U.S. dollar remains the most influential factor in pricing gold in the Egyptian market. The official exchange rate at the Central Bank of Egypt remained stable at EGP 49.64 for buying and EGP 49.74 for selling, limiting the transmission of global losses into domestic gold prices.

The global gold market is undergoing a structural shift in pricing dynamics. Geopolitical tensions alone are no longer sufficient to drive prices higher. Instead, investors are increasingly focused on how geopolitical developments affect energy prices and inflation, and consequently the Federal Reserve's monetary policy decisions.

Higher oil prices fuel inflationary pressures, supporting the U.S. dollar and pushing Treasury yields higher, thereby increasing the opportunity cost of holding non-yielding assets such as gold. This explains why bullion continues to face pressure despite ongoing geopolitical uncertainty.

Investors are now paying closer attention to U.S. inflation data, Federal Reserve policy decisions, and Treasury market movements, which have become the dominant drivers of gold prices.

Gold's weekly losses coincided with continued dollar strength and higher U.S. Treasury yields after comments by U.S. President Donald Trump regarding renewed communications with Iran and his confirmation that the ceasefire had ended reinforced expectations of elevated energy prices and persistent inflationary pressures, influencing the outlook for U.S. monetary policy.

The yield on the 10-year U.S. Treasury note climbed to around 4.57%, while the U.S. dollar continued to strengthen against a basket of major currencies as investors increasingly anticipated that interest rates would remain higher for longer.

Minutes from the latest Federal Open Market Committee meeting showed that most policymakers believe inflation risks remain elevated. At the same time, U.S. economic data reinforced that view after initial jobless claims fell to 215,000, highlighting continued labor market resilience and giving the Federal Reserve greater room to maintain its restrictive policy stance.

During the coming week, investors will closely watch the U.S. Consumer Price Index (CPI) report, along with testimony from Federal Reserve Chair Kevin Warsh before Congress, both of which are expected to have a significant impact on interest rate expectations and the direction of gold and the U.S. dollar.

Pressure on gold has not been limited to the stronger dollar and rising bond yields. Investor positioning in physically backed gold exchange-traded funds (ETFs) has also weighed on prices, as higher opportunity costs and the increased attractiveness of fixed-income assets prompted some investors to reduce their gold holdings, limiting bullion's ability to regain momentum despite ongoing geopolitical risks.

The market is currently being shaped by two opposing forces. On one hand, a stronger dollar, rising real yields, and expectations of prolonged monetary tightening continue to pressure gold prices in the short term. On the other hand, sustained sovereign demand from central banks is providing a supportive floor and reducing the likelihood of a sharp and prolonged decline.

Central banks continued to expand their gold reserves, underscoring persistent official-sector demand despite the recent correction in prices.

According to the latest data from the World Gold Council, central banks added a net 41 tonnes of gold to their official reserves in May. Poland's National Bank led purchases with 18 tonnes, followed by the People's Bank of China with 10 tonnes, while Singapore, Kazakhstan, and Uzbekistan also increased their holdings. Limited sales were reported by Turkey and Russia.

Adam Glapiński, Governor of the National Bank of Poland, stated that the country continues to purchase gold on a regular basis, taking advantage of price declines. He emphasized that the objective is to strengthen national security and safeguard reserve assets rather than speculate on prices, with Poland targeting gold reserves of 700 tonnes in the coming years.

This trend is further supported by the 2026 World Gold Council Central Bank Survey, which found that 45% of central banks plan to increase their gold reserves over the next 12 months, while nearly 90% expect official global gold holdings to continue expanding in the years ahead.

The latest survey by the Official Monetary and Financial Institutions Forum (OMFIF) also highlighted an ongoing shift by central banks toward greater reserve diversification away from the U.S. dollar, with gold increasingly viewed as a strategic reserve asset amid geopolitical uncertainty, rising global debt levels, and the broader use of economic sanctions.

The outlook for the second half of 2026 is expected to remain dominated by the struggle between two key forces. The first is the continued strength of the U.S. dollar, elevated real yields, and restrictive monetary policy, all of which are weighing on gold in the short term. The second is sustained central bank buying, resilient investment demand, and persistent geopolitical and economic uncertainty, which continue to provide long-term structural support for bullion.

Gold is currently undergoing a repricing process driven primarily by expectations surrounding U.S. monetary policy rather than political developments. Inflation data and Federal Reserve decisions are expected to remain the decisive factors shaping gold prices in the months ahead, while central bank purchases continue to serve as a stabilizing force, reducing the risk of a prolonged downturn and supporting prices above the key psychological level of $4,000 per ounce.