Gold Rises Locally and Globally Supported by Renewed Rate Cut Bets Despite Dollar Pressure

Gold prices witnessed a notable rise in both local and global markets during mid-day trading on Monday, after growing expectations that the Federal Reserve will cut interest rates next month helped absorb the impact of the U.S. dollar's strength, according to a report by the "iSagha" platform for gold and jewelry trading.

 Saied Embabi, the platform's CEO, stated that gold prices in the local market rose by about 25 EGP compared to last Saturday's close, bringing the 21-karat gram to 5,475 EGP, while the ounce rose globally by about $16, recording $4,081. The 24-karat gram recorded about 6,257 EGP, and 18-karat about 4,693 EGP, while the gold pound stabilized at 43,800 EGP.

The report indicated that gold had declined over the past week by about 5 EGP locally, where 21-karat opened trading at 5,455 EGP and ended the week at 5,450 EGP, while the ounce lost about $21 globally, falling from $4,086 to $4,065.

 Embabi explained that the markets—local and global—began the week in a state of calm amid traders' anticipation of the Federal Reserve's monetary policy outcomes. He added that uncertainty has increased with conflicting statements from Fed members and the absence of substantial economic data during this period.

 Markets remain in a waiting state to rebuild interest rate cut expectations for December, especially after comments by New York Fed President John Williams on Friday, in which he confirmed there is room for monetary easing in the near term. His statements contributed to boosting cut expectations, although some policymakers continue to adopt a more conservative tone.

The scene is becoming increasingly blurry with the absence of economic data before the Federal Open Market Committee (FOMC) meeting on December 9 and 10, in light of the postponement of inflation and employment reports until the middle of next month.

 Stock market movements indicate a limited improvement in risk appetite after a volatile week, which limited gold's gains as a safe haven, despite continued global geopolitical pressures. Attempts to establish peace between Russia and Ukraine—under U.S sponsorship—still face clear fragility, making any potential stumble capable of quickly restoring safe-haven flows. 

The U.S. dollar index is trading near the 100.10 level, down slightly from its recent peak of 100.39, which gave gold limited support given that a weaker dollar lowers the cost of the yellow metal for holders of other currencies.

Last week witnessed a sharp contrast in the tone of Fed officials; John Williams described the current policy as "somewhat restrictive," confirming the possibility of an "additional adjustment" toward neutrality, in light of slowing economic activity and a gradually cooling labor market, along with the emergence of downside risks to employment. 

In contrast, other officials—such as Collins and Logan—adopted a more cautious stance toward a rate cut in December, citing the continued relative stability of inflation.

 Following Williams' comments, rate cut expectations jumped to nearly 70% according to the CME FedWatch tool, after being much lower at the beginning of the week.

On the geopolitical front, the new 28-point U.S. plan to end the Russia-Ukraine war has returned to the forefront after meetings described as "productive" in Geneva. 

Reports indicate that U.S. President Donald Trump wants Ukraine to show a clear position on the plan before Thursday, despite Secretary of State Marco Rubio's confirmation that the deadline is "non-binding." 

The dollar stabilized near its weekly peak, increasing the cost of dollar-denominated gold for global investors. Ole Hansen, Head of Commodity Strategy at Saxo Bank, said gold is moving in a limited range while investors reassess interest rate cut probabilities, especially after Williams' comments about the possibility of lowering borrowing costs without compromising the inflation target, and amidst clear weakness in the U.S. labor market.

Meanwhile, investors are awaiting important economic data this week, including retail sales, jobless claims, and Producer Price Index (PPI) figures. Washington and Kyiv also continue to work on an updated formulation of the plan to end the war with Russia, after broad criticism was directed at the previous proposal for favoring Moscow.

 Standard Chartered noted in a research memo: "Gold is finding it difficult to regain its momentum due to interest rate cut probabilities, weak Chinese demand, and receding trade risks. 

Despite these pressures, central banks continue to buy gold, while concerns remain regarding the Supreme Court ruling related to Trump's tariffs."