Gold prices in the local market rose during trading on Saturday, coinciding with the global stock market weekend, after the ounce gained about 1% over the week. This was driven by growing expectations that the U.S. Federal Reserve will continue its monetary easing policy next year, according to a report by the Ai Sagha platform.
Saeed Embabi, the platform’s CEO, said that local gold prices increased by about 5 Egyptian pounds per gram, with 21-carat gold reaching 5,785 EGP, while the ounce rose by about $40 in global trading last week to reach $4,339. He added that 24-carat gold recorded 6,611 EGP per gram, 18-carat at 4,959 EGP, and the gold pound reached 46,280 EGP.
Global gold prices hit new record levels before the weekend, supported by data showing a decline in U.S. consumer confidence and a slight drop in inflation expectations. During the week, the ounce reached a high of $4,374 on Thursday, approaching the annual peak of $4,381, despite rising global bond yields.
In this context, U.S. Treasury yields rose following the Bank of Japan’s decision to raise interest rates from 0.50% to 0.75%, pushing the 10-year U.S. Treasury yield up by about 2.5 basis points to 4.147%, while real U.S. yields increased to 1.907%. Although these yields usually move inversely to gold prices, the yellow metal continued its gains, supported by strong demand factors.
Data from the University of Michigan showed that the U.S. Consumer Sentiment Index fell to 52.9 in December from 53.3 previously, below expectations of 53.5. Survey participants anticipated higher unemployment and a continued decline in durable goods purchases for the fifth consecutive month. One-year inflation expectations rose to 4.2%, while five-year expectations remained stable at 3.2%.
Meanwhile, John Williams, President of the Federal Reserve Bank of New York, stated that recent data points to a further decline in inflation rates, noting that the rise in unemployment may be a temporary distortion, and confirming there is no urgent need to adjust monetary policy at present.
Markets are set to receive a range of U.S. economic data next week, shortened due to the Christmas holiday. This includes ADP employment changes, the initial reading of Q3 GDP growth, durable goods orders, and industrial production data.
Regarding inflation, the U.S. Consumer Price Index for November rose 2.7% compared to 3% previously, though economists warned of cautious interpretation due to the 43-day government shutdown affecting data accuracy.
According to Capital Edge, the probability of a Federal Reserve rate cut at its next meeting on January 28 remains around 22%, while markets are pricing in a cumulative 60-basis-point reduction during the next year, with the first cut likely in June. Traders also estimate a roughly 20% chance of a January rate cut.
On a broader scale, precious metals continued to perform strongly this year, with gold and silver heading for their best annual performance since 1979. Silver prices more than doubled, while gold rose about two-thirds, supported by central bank purchases and inflows into bullion-backed ETFs.
Goldman Sachs analysts noted that declining U.S. interest rates pushed ETF investors to compete with central banks over the limited bullion supply, forecasting that structural support from official demand and periodic support from rate cuts will continue to bolster gold prices in the coming period.
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