Gold Prices Rise as Dollar Weakens and U.S. Government Shutdown Drags On

Gold prices rose in both local and global markets on Thursday, as the U.S. dollar retreated from its five-month high amid the ongoing U.S. government shutdown and growing concerns over its economic and political repercussions, according to a report from “iSagha”, a gold and jewelry trading platform.

Said Embabi, CEO of the platform, said that local gold prices rose by EGP 30, with 21-karat gold reaching EGP 5,355, while the global ounce climbed by $29 to $4,013.

He added that 24-karat gold recorded EGP 6,120, 18-karat gold stood at EGP 4,590, and the gold pound coin stabilized at EGP 42,840.

The report explained that the yellow metal regained the key psychological level of $4,000 per ounce, supported by a weaker dollar and investors’ fears over what could become the longest government shutdown in U.S. history, boosting safe-haven demand for gold.

Investors are also awaiting comments from several Federal Reserve officials later today for clues about the future direction of monetary policy.

U.S. Employment Data and Fed Outlook

Employment data released by ADP showed an unexpected increase of 42,000 jobs in October, compared with a decline of 29,000 in the previous month, reinforcing expectations that the Federal Reserve may hold off on cutting interest rates in December.

Steven Miran, a member of the Federal Reserve Board, described the data as a “pleasant surprise”, while stressing the need for a more flexible monetary stance, warning that maintaining the current policy could “expose the economy to unnecessary risks.”

The remarks come amid a split within the Fed regarding the pace of rate cuts. The U.S. central bank reduced interest rates by 25 basis points last week — the second consecutive cut — amid signs of a cooling labor market.

Surging Gold Demand in the U.S. and Central Bank Buying

A World Gold Council (WGC) report released on November 5 showed that U.S. gold demand jumped 58% year-on-year to 186 tonnes in the third quarter, driven by record inflows into gold-backed ETFs, which added 137 tonnes, accounting for 62% of global inflows.

Trading volumes in COMEX and U.S. gold ETFs also reached an all-time high of $208 billion per day in October.

In a separate report, the WGC revealed that central banks made net purchases of 39 tonnes in September, bringing year-to-date acquisitions to 200 tonnes. Brazil topped the list with 15 tonnes, followed by Kazakhstan and Guatemala.

Regional Developments and Market Outlook

Regionally, Bloomberg reported that Cambodia plans to store part of its gold reserves in the Shanghai Gold Exchange vault located in the Shenzhen Free Trade Zone — a move highlighting a broader trend among countries seeking to diversify their reserves away from traditional centers like London.

Despite ongoing political and economic uncertainty, gold remains in a strong defensive position as a safe-haven asset, supported by a weaker dollar and uncertainty over U.S. monetary policy, though gains are being capped by strength in global equities.