Gold prices rose in both local and international markets during Thursday’s trading, driven by a weakening U.S. dollar, falling U.S. Treasury yields, and market anticipation ahead of key inflation data expected later today.
Saeed Embabi, Executive Director of the "iSagha" platform for online gold and jewelry trading, stated that local gold prices increased by approximately EGP 10 compared to Wednesday's close, with 21-karat gold reaching EGP 4,530 per gram. Meanwhile, the global ounce price rose by around $37 to hit $3,308.
The price of 24-karat gold stood at EGP 5,177, 18-karat at EGP 3,883, and 14-karat at EGP 3,020, while the gold pound recorded EGP 36,240.
Yesterday, gold had declined by about EGP 45 per gram, dropping from EGP 4,565 to EGP 4,520, despite a slight global increase in the ounce price from $3,271 to $3,325.
Fed Decisions and Global Market Impact
Embabi pointed out that today’s price rebound followed a sharp decline at the end of Wednesday's session, influenced by the U.S. Federal Reserve’s decision to maintain interest rates at 4.25%-4.50%, which triggered a wave of selling in international markets.
Despite the Fed’s hold on interest rates, inflation concerns persist. In its statement, the Fed slightly adjusted its economic outlook, noting a slowdown in growth during the first half of the year. An internal division also emerged in the Federal Open Market Committee, with members Michelle Bowman and Christopher Waller voting in favor of a rate cut.
Despite this divergence, markets still anticipate two potential rate cuts in 2025, with the first possibly occurring in September, driven by slowing growth and weakening consumer spending.
Fed Chair Jerome Powell, however, provided no clear guidance regarding the September meeting, emphasizing that it's still "too early" to determine the direction of monetary policy. Market attention now turns to new tariff policies and upcoming inflation data, particularly the Fed's preferred inflation gauge—Core Personal Consumption Expenditures (PCE)—set to be released later Thursday.
Trump’s Tariffs Boost Demand for Gold
On another front, newly announced protectionist measures by U.S. President Donald Trump have contributed to a surge in global gold demand. The measures include reinstated tariffs on imports from South Korea, Brazil, and India, along with the removal of exemptions for low-value shipments.
Key actions include a 15% tariff on South Korean goods and a 50% tariff on Brazilian imports. Despite Trump’s optimistic remarks about trade talks with China, markets remain cautious about potential disruptions ahead of the August 1 deadline for reciprocal trade agreements.
Shifting Egyptian Consumer Behavior Toward Gold
On the domestic front, Embabi highlighted World Gold Council data for Q2 2025, which shows clear shifts in how Egyptian consumers approach gold—both in traditional jewelry purchases and in direct investment through bullion and coins.
He explained that these shifts reflect a changing economic landscape. Gold is no longer viewed solely as a stable, traditional safe haven, but rather as an asset whose role is being reassessed amid economic volatility.
Jewelry Purchases Decline
Purchases of gold jewelry in Egypt fell to approximately 5.7 tons in Q2—down 17% year-on-year and also lower than the 6.4 tons recorded in Q1.
Embabi attributed the decline to weak consumer purchasing power, as the U.S. dollar surpassed EGP 50 locally, and global price volatility caused many to delay buying decisions. Purchases are now driven mostly by necessity (such as for weddings), or through selling existing holdings to capitalize on price differences.
He added that this behavior is no longer unusual but rather represents a broader trend, as rising living costs have eroded the culture of long-term savings among Egyptian households.
Cautious Return to Bullion and Coins
In terms of direct investment, bullion and coin purchases declined 23% year-on-year to 5.9 tons in Q2. However, there was a noticeable increase compared to Q1, which saw 4.7 tons sold.
Embabi noted this reflects a gradual return of individual investors to gold as a hedging tool, especially given the lack of attractive investment alternatives, with the real estate market stagnating and inflation making it difficult for financial instruments to offer real returns.
He emphasized that gold is no longer purchased solely for long-term savings but is increasingly used as a dynamic tool for short- to medium-term risk management. Egyptian consumers are now more market-savvy, monitoring prices closely, postponing or making decisions to buy or sell based on perceived value.
Embabi expects cautious demand for jewelry to persist, while bullion and coin sales may experience a mild recovery if prices continue to rise or stabilize.
He concluded by stressing that gold will remain ingrained in the Egyptian mindset as a store of value, but the way it is utilized has evolved—clearly reflected in both recent data and consumer behavior patterns.
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