Gold Retreats Amid Trade Deal Hopes, Rising Dollar

Gold prices retreated in local markets and on the global stock exchange during today's trading, affected by the dwindling demand for safe-haven assets amidst growing optimism about reaching a trade deal between the United States and China, in addition to the rise of the US dollar, according to a report issued by the "iSagha" platform, which specializes in gold and jewelry trading.

Said Embaby, the platform's Executive Director, stated that gold prices dropped by about 130 Egyptian pounds in the local market during today's trading, with 21-carat gold registering 5430 pounds per gram, while the ounce globally declined by about $82 to record $2032.

24-carat gold recorded approximately 6206 pounds per gram, and 18-carat reached 4654 pounds, while 14-carat stabilized at 3620 pounds. The gold pound (Genie Gold) recorded 43440 pounds with no significant change.

The report noted that gold prices had fallen by about 200 pounds during last week's trading. 21-carat gold started the week at 5750 pounds per gram, touched 5900 pounds as its highest historical level, before closing trading at 5550 pounds. Globally, the ounce witnessed wide price fluctuations, declining from $4254 to a record peak of $4381, and then closed the week at $4114 per ounce.

Trade Optimism Weighs on the Yellow Metal

Embaby explained that prices are under downward pressure due to weak investment demand, coinciding with improved risk appetite in global markets following positive statements by the US President regarding the chances of reaching a "good" trade agreement with China this week.

This optimism was reinforced by announcements from Washington and Beijing about making progress on key trade issues, including export controls, combating fentanyl smuggling, agricultural trade, and shipping fees, which paves the way for political leaders to conclude final agreements during the anticipated talks.

Rising Dollar Increases Pressure

The dollar index—which measures the performance of the US currency against six major currencies—rose by 0.03% to record 98.98 points, an increase that adds pressure on gold as a dollar-denominated asset.

Strong gains in global stock markets also led to a reduction in demand for the precious metal, with economic forecasts being boosted in light of the trade developments.

Anticipation of Global Central Bank Meetings

The report stated that traders are awaiting a package of monetary policy decisions this week, with expectations pointing towards the Federal Reserve tending to cut interest rates by 25 basis points, supported by a slowdown in US inflation.

Despite this accommodative trend, which typically supports gold prices by lowering the opportunity cost of holding it, technical movements and signs of profit-taking may limit the prices' ability to quickly return to their record levels.

Caution Regarding Existing Economic and Political Developments

The report emphasized that the optimistic mood does not conceal the continued presence of economic and geopolitical risks, including the prolonged US government shutdown and its effects on vital sectors and food aid programs, which increases the likelihood of gold rising again should uncertainty escalate in the coming period.

According to the report, gold's decline at the end of last week came as part of a wave of profit-taking after the previously achieved record levels, driven by the improved trade scene. However, it also noted that any setback in negotiations or additional gains for the dollar could push prices towards more sharp volatility in the short term.