Gold prices, both domestically and internationally, surged during Monday's trading, driven by increasing bets on US Federal Reserve interest rate cuts, which weakened the US dollar. Simultaneously, concerns about a potential US government shutdown bolstered demand for the safe-haven asset, according to a report from "iSagha," a platform specializing in gold and jewelry trading.
Local and International Price Movements
Saeed Embaby, the executive director of the "iSagha" platform, stated that gold prices jumped by around 75 Egyptian pounds today compared to the end of last week. A gram of 21-karat gold reached 5,150 EGP, while the price of an ounce on the global exchange rose by $68, reaching a historic high of $3,828.
He added that a gram of 24-karat gold hit 5,886 EGP, 18-karat gold was 4,414 EGP, and 14-karat gold was 3,434 EGP. The price of a gold pound remained stable at 41,200 EGP.
Embaby explained that local gold prices increased by approximately 105 EGP last week, opening at 4,970 EGP and closing at 5,075 EGP. Globally, the ounce rose by about $75, from $3,685 to $3,760.
Drivers of the Global Surge: Dollar Weakness and Government Shutdown Fears
The US Dollar Index fell as investors awaited a meeting today between US President Donald Trump and congressional leaders to reach an agreement on extending government funding.
If negotiations fail, a government shutdown would begin on Wednesday, which could lead to a delay in the release of important US employment data and increase uncertainty regarding the Fed's monetary policy path.
Giovanni Staunovo, an analyst at UBS, said that the Federal Reserve's willingness to implement further interest rate cuts over the next six months supports a continued rise in gold prices. He expects the precious metal to target the $3,900 per ounce level, adding that the fear of a government shutdown reinforces demand for gold as a safe haven.
Rate Expectations and Inflation Data Support Upward Trend
The US Personal Consumption Expenditures (PCE) index, the Fed's preferred measure of inflation, came in line with expectations, reinforcing market bets on a new rate cut. The CME FedWatch Tool indicates a 90% probability of a 25 basis point rate cut in October and a 65% probability of another cut in December.
Gold typically benefits from periods of interest rate cuts as a non-yield-bearing asset and thrives during times of economic and political uncertainty. The precious metal has risen by about 45% since the beginning of the year, supported by a strong wave of institutional and central bank purchases.
Record Investment Flows
The SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, announced that its holdings increased by 0.89% to 1,005.72 tonnes last Friday, reflecting growing institutional demand for the yellow metal.
In a research note, Deutsche Bank explained that official demand and holdings by Exchange-Traded Funds (ETFs) are the main drivers of gold's current strength, while weak demand for jewelry and recycled metals are factors limiting the price increase.
Historic Rise for Precious Metals
The surge was not limited to gold alone. Silver jumped 2.1% to $47 per ounce, the highest level in over 14 years. Platinum rose 2.5% to $1,606.77, its highest in 12 years, while palladium increased 0.7% to $1,279.15.
Gold: Between Investment Momentum and Political Risks
Strong investment demand from funds and central banks provides continuous support for the price. Rising prices may reduce demand for gold jewelry in emerging markets. Political uncertainty in the United States and the possibility of a shutdown enhance gold's appeal as a hedging tool.
Market Outlook for Q4 2025
The upward momentum in gold prices is expected to continue unless strong economic data emerges that reduces the likelihood of rate cuts. Institutional and official demand will remain the most prominent driver of prices, while the jewelry industry faces pressure from rising costs.
Analysts believe that gold may test the $3,900 level in the near term, with the potential for new record highs if the dollar continues to weaken and concerns about a deteriorating US economy or budget impasse grow. In a related context, markets are awaiting the release of employment data and industrial activity indicators to determine the Fed's direction during the last quarter of the year.
Summary: Gold continues a historic upward trajectory, supported by intertwined economic and geopolitical factors, most notably bets on interest rate cuts, fears of a US government shutdown, and record investment flows, making it the primary focus in global and local markets alike.
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