Gold Prices Fluctuate Despite Rising Safe-Haven Demand

Gold prices, both locally and globally, experienced volatility during trading on Monday, despite the global ounce price climbing to a three-week high, supported by increased demand for gold as a safe-haven asset amid escalating trade tensions between the United States, the European Union, and Mexico.

In the local market, gold prices gave up their early gains. The 21-karat gold lost the morning's upward momentum, settling at EGP 4,660 per gram, the same as last week's closing price. Globally, the ounce erased its initial gains, stabilizing at $3,355.

Gold prices in the local market were as follows: 24-karat: EGP 5,326, 18-karat: EGP 3,994, 14-karat: EGP 3,107, Gold pound (8 grams of 21k): EGP 37,280

Last week, gold prices rose by EGP 20, starting at EGP 4,640 and closing at EGP 4,660. Globally, the ounce gained $18, moving from $3,337 to $3,355.

The recent movements in gold prices have been driven by renewed trade fears, following Washington’s announcement of plans to impose 30% tariffs on imports from the EU and Mexico starting in early August, after the failure of recent negotiations to reach a comprehensive agreement.

These declarations triggered concern in global markets, prompting investors to hedge through gold, amid warnings of potential negative impacts on international trade flows. Brussels and Mexico described the proposed tariffs as “unfair and destabilizing.” Meanwhile, the European Commission announced an extension of its suspension of retaliatory measures until early August, in hopes of reaching a diplomatic resolution.

In another development, investors are awaiting the release of U.S. inflation data for June, scheduled for Tuesday. These figures are expected to offer insights into the Federal Reserve’s interest rate direction over the coming months.

Market expectations currently point toward a potential 50 basis-point rate cut before the end of the year. Such a move would likely enhance gold’s appeal as a hedge asset that, while non-yielding, tends to outperform in low-interest environments.

Data from the SPDR Gold Trust—the world’s largest gold-backed exchange-traded fund—showed that its holdings declined by 0.12% on Friday, dropping to 947.64 metric tons from 948.80 metric tons the previous day.

Additionally, the U.S. Commodity Futures Trading Commission (CFTC) reported a decline in speculative positions on gold, with net long contracts falling by 1,855 in the week ending July 8, bringing the total to 134,842 net long positions.