Gold Retreats from Two-Week High as Dollar Strengthens

Gold prices declined in local markets on Monday, despite a slight increase in global spot prices, after remarks from Federal Reserve Chair Jerome Powell reinforced expectations of interest rate cuts.

Local gold prices fell by about 5 Egyptian pounds during the session, with 21-carat gold recording 4,580 pounds per gram. Meanwhile, the global ounce rose by $2 to $3,673.

The report added that 24-carat gold stood at 5,234 pounds, 18-carat at 3,926 pounds, while the gold pound coin reached 36,640 pounds.

Last week, local prices had risen by nearly 45 pounds per gram, while the global ounce gained over $35.

Powell’s Remarks and Rate Cut Expectations

Powell’s comments at the Jackson Hole symposium strengthened market bets on a rate cut at the Fed’s September meeting.

He noted that the labor market is showing signs of weakness, while inflation remains a threat due to tariffs, stressing that the Fed is in a “difficult position” between price pressures and slowing employment.

Markets interpreted his remarks as a clear signal of a more dovish stance, boosting expectations of a 25-basis-point rate cut next month, with another likely reduction in December.

According to CME FedWatch, the probability of a September cut jumped to 87% from 71% before Powell’s speech.

Market Reactions

The expectations reverberated across financial markets: U.S. bond yields fell, Wall Street stocks advanced, and the dollar gave up some recent gains, limiting gold’s losses.

Despite the current pullback, analysts expect the yellow metal to reach new record highs above $3,500 an ounce if the Fed maintains its dovish approach, particularly amid continued central bank gold purchases.

Key Economic Data Ahead

Markets are now awaiting U.S. new home sales data later today, along with comments from New York Fed President John Williams.

Tuesday will bring durable goods orders and consumer confidence data, while Thursday will feature weekly jobless claims, preliminary GDP readings, and core PCE figures.

On Friday, the focus will be on the final core PCE inflation data—the Fed’s preferred inflation gauge—alongside the University of Michigan survey on consumer sentiment and one- and five-year inflation expectations.

Geopolitical Tensions Remain

Geopolitical risks continue to linger, with Russia accusing Ukraine of targeting a nuclear power plant with drones, even as Moscow signals openness to peace talks. Germany has also joined efforts to bolster Kyiv’s security.