Gold Records Slight Gains, Supported by Rising Global Risks and Expectations of US Interest Rate Cuts

Gold prices in local and global markets recorded limited increases during Monday's trading, driven by rising global geopolitical risks, commercial uncertainty, and fears of a US government shutdown, according to a report from "iSagha" platform, which specializes in gold and jewelry trading.

Saeed Embaby, the platform's Executive Director, stated that gold prices rose by about 5 EGP during today's trading, with the price of 21-karat gold recording 5,755 EGP. Meanwhile, the ounce rose by about $6 to reach $4,260.

The 24-karat gold recorded 6,577 EGP, 18-karat reached 4,933 EGP, and 14-karat was around 3,837 EGP. The price of the gold pound remained stable at 46,040 EGP.

Gold prices in local markets had risen by approximately 350 EGP last week. The 21-karat gold gram opened at 5,400 EGP, touched a historical high of 5,850 EGP, before closing the week at 5,750 EGP. Globally, the ounce soared by about $237, from $4,017 to a record high of $4,380, before closing at $4,254 per ounce.

The report explained that gold on the global exchange partially recovered during today's trading after a sharp decline at the end of last week, as investment demand for the precious metal returned to halt the intense selling that followed prices hitting their historical peak of $4,380 per ounce.

The ongoing commercial uncertainty, escalating geopolitical tensions, and fears of the impact of the US government shutdown on economic activity continue to push investors toward gold as the primary safe haven during times of crisis.

Cautious forecasts from the US Federal Reserve also support gold demand, as markets are leaning towards anticipating two further interest rate cuts of 25 basis points each during the upcoming October and December meetings, according to data from the CME Group’s FedWatch Tool.

These expectations, along with intensive buying by central banks and strong flows into Exchange-Traded Funds (ETFs), constitute essential drivers for the continued demand for the yellow metal, while global financial fears remain a key supportive factor for the market.

The report noted that statements made by US President Donald Trump last Friday eased concerns about an all-out trade war between Washington and Beijing. He affirmed that imposing comprehensive tariffs on China "would not be sustainable," and announced his readiness to meet with his Chinese counterpart.

These statements prompted some investors to take profits after the strong rally, but the ensuing decline remained correctional and limited in impact.

Investors continue to monitor the repercussions of the US government shutdown, which entered its third week amid sharp disagreements between Republicans and Democrats over healthcare funding legislation, at a time when the Senate is preparing to vote for the eleventh time on the interim funding bill.

Furthermore, concerns are rising over the increasing US government debt and declining fiscal discipline, which maintains additional support for the precious metal.

Federal Reserve officials entered a "media blackout" period before the Federal Open Market Committee meeting in October, leaving the markets subject to upcoming trade developments and economic data.

Traders are in anticipation ahead of the release of the US Consumer Price Index (CPI) data next Friday, which will play a crucial role in determining the path of future interest rate decisions. In this context, a number of Fed officials, including Alberto Musalem, Christopher Waller, and Neel Kashkari, have announced their support for an interest rate cut during the October meeting while maintaining the 2% inflation target.

Emsbawy confirmed that gold is still moving on an upward trajectory since the beginning of the year, having risen by 54% locally and 62% globally, recording its best weekly performance since the Lehman Brothers crisis in 2008.

He explained that prices witnessed a temporary correction below the $4,200 level before resuming the increase, supported by the atmosphere of de-escalation between Beijing and Washington, pointing out that the general trend remains bullish, backed by strong fundamentals.

Global bank analysts predict the continuation of the rally over the next two years. HSBC raised its average gold price forecast for 2025 to $3,455 per ounce, expecting it to reach $5,000 in the first half of 2026, while Standard Chartered projected an average price of $4,488 next year.

Societe Generale and Bank of America also raised their price forecasts, while Jamie Dimon, CEO of JP Morgan, stated that gold could easily reach $5,000 or even $10,000 per ounce under the current economic conditions.

Since gold surpassed the $2,000 per ounce barrier in 2020, the market has witnessed sharp fluctuations. Prices fell to $1,677 in March 2021, then retested the $1,600 level in October 2022, before beginning a rally that lasted three consecutive years, leading it to its current record levels.

Analysts believe that this wave has not yet reached its end, even if prices experience periods of consolidation or correction.

The report warns that the slowdown in global economic growth is starting to cast a shadow over the banking sector, with companies struggling to repay loans. Some estimates suggest the possibility of a return of a regional banking crisis in the United States, at a time when Congress's failure to pass funding legislation is exacerbating market anxiety.

Observers suggest that the current government shutdown may extend for a period exceeding the record of 35 days set in 2018.

Amidst this atmosphere of fear and global economic uncertainty, gold appears to have become the safest haven for investors and consumers alike, especially with declining confidence in the US dollar and the continued expansion of global debt.

Despite warnings of short-term profit-taking probabilities, experts believe that the general trend for gold remains positive and open to further rises amid escalating geopolitical tensions and global financial pressures.