Gold prices fall by EGP 510 in local markets over one week

Gold prices in local markets recorded a decline of about 7% during last week’s trading, while the global ounce fell by about 10.4%, as expectations for U.S. Federal Reserve interest rate cuts faded and geopolitical tensions in the Middle East escalated, according to a report issued by the iSagha platform.

Eng. Saeed Embabi, CEO of the iSagha platform, said that gold prices in the local market declined by about EGP 510 over the past week, with 21-karat gold opening trading at EGP 7,425 per gram and closing at EGP 6,915 per gram.

Embabi added that 24-karat gold recorded about EGP 7,903 per gram, 18-karat gold reached about EGP 5,927 per gram, while the gold pound recorded about EGP 55,320.

He explained that the local market is trading at a discount of about EGP 327 compared to the global price based on the official exchange rate set by the Central Bank, amid weak demand.

He added that raw gold traders are hedging amid fears of a potential exchange rate liberalization with banks resuming operations on Tuesday, along with concerns that gold prices may rise again.

On the global level, the gold ounce fell by about $524, opening the week at $5,021 and closing at around $4,497, marking its largest weekly loss since 1983 and a decline of more than 14% since the start of the Iran war.

The report noted that the war in Iran has disrupted global oil flows, damaged energy infrastructure, and raised fears of a prolonged conflict. Despite gold typically being considered a safe-haven asset during periods of economic uncertainty, it declined sharply.

During times of turmoil, investors usually buy gold as a hedge against inflation, currency depreciation, or economic crises. However, rising energy prices due to the Middle East conflict have pushed central banks around the world to reconsider interest rate expectations, which has negatively affected gold’s attractiveness compared to income-generating investments such as bonds.

The report indicated that the Federal Reserve kept interest rates unchanged for the second consecutive meeting, and traders now expect no rate cuts this year, according to the CME FedWatch tool, increasing the opportunity cost of holding gold.

The report also confirmed that central banks around the world are adjusting their monetary policies in response to the Iran war and energy price volatility. In some cases, such as the Reserve Bank of Australia, central banks have raised interest rates instead of keeping them unchanged.

The recent rebound in the U.S. dollar has also made gold — which is priced in dollars — relatively more expensive for international investors. The U.S. dollar trend remains a key factor influencing gold prices, as gold typically benefits from a weaker dollar and loses momentum when the dollar strengthens.

The report added that the U.S. Dollar Index rose by about 2% since the start of the Iran war, reducing gold’s attractiveness amid inflation concerns and expectations of higher interest rates, prompting investors to rebalance their portfolios.

The platform noted that gold witnessed a massive rally over the past two years, rising by 65% in 2025, marking its best performance since 1979, and the metal reached $5,000 per ounce for the first time in January. However, the rally has started to lose momentum, as some investors began selling gold to cover losses in other assets or rebalance their investment portfolios.

Analysts at Dutch bank ING indicated that bullish momentum in gold has started to fade, with some investors selling gold to raise liquidity or rebalance portfolios, despite continued long-term optimism for the yellow metal. Analysts still expect gold to reach $6,000 by the end of the year, with the possibility of revising the target to $5,000 if geopolitical tensions persist alongside inflation and rising U.S. debt.

Data also confirmed that rising U.S. Treasury yields and market expectations that the Federal Reserve will not cut interest rates have kept gold under continued downward pressure.

The Middle East conflict has also had direct impacts on oil prices, with West Texas Intermediate crude rising about 4% to $98.29 per barrel, following Israeli attacks on Iranian energy facilities and Iran’s retaliatory strikes targeting energy infrastructure in Gulf countries such as Saudi Arabia, Qatar, and Kuwait.

The report also noted that the Federal Reserve maintained its tight monetary policy, with Chair Jerome Powell stating that interest rates would not be cut unless there is clear progress in reducing inflation.

At the same time, economic projections showed that policymakers are still considering rate cuts despite the Middle East conflict, while Federal Reserve officials such as Christopher Waller and Michelle Bowman indicated that rising inflation and higher energy prices could change their original plans for rate cuts.

Analysts emphasized that the previous rally in gold and silver prices during 2025 was driven by inflows from retail investors and systematic hedge funds, with participation from funds not necessarily linked to long-term gold investments.

The report concluded that next week’s U.S. economic calendar will include key data such as preliminary PMI readings, the current account, jobless claims, and wholesale inventories, which are expected to influence global gold price movements.