Gold Shines Amid Rising Geopolitical Tensions and a Weaker Dollar

Gold prices surged in both local and global markets on Thursday, fueled by increased demand for the yellow metal as a safe haven amid escalating tensions between Iran and Israel and a weakening U.S. dollar. Investors are also closely watching for new signals on the future path of U.S. monetary policy.

In Egypt’s local market, gold prices jumped by EGP 55, with the price of 21-karat gold reaching EGP 4,720, up from EGP 4,665 at the start of yesterday’s trading. Meanwhile, the global spot price of gold rose by $27 per ounce, climbing to $3,380. This increase was reflected across all karat levels: 24K gold recorded EGP 5,394, 18K at EGP 4,046, and 14K at EGP 3,147. The gold pound (8g of 21K) reached EGP 37,760.

This upward movement comes as markets remain on edge. Reports, including one from NBC News, indicate that Israel is considering a potential military strike against Iran. This heightened geopolitical risk has driven investors toward gold as a hedge against uncertainty. Additional tension was fueled by comments from former U.S. President Donald Trump, who threatened new tariffs — adding to the pressure on the global economic outlook and further supporting gold’s rally.

Gold also benefited from a noticeable decline in the U.S. dollar following the release of inflation data, which showed a modest slowdown in consumer price growth. This has increased speculation that the Federal Reserve may have room to cut interest rates later this year.

U.S. consumer price index (CPI) data showed that annual inflation rose to 2.4% in May, in line with market expectations, while core inflation — which excludes volatile food and energy prices — held steady at 2.8%. Analysts interpreted this as a sign that inflationary pressures are easing, supporting the position of Federal Reserve members advocating for a more accommodative monetary policy.

Markets are now awaiting the release of the U.S. Producer Price Index (PPI) later today. Forecasts suggest the annual PPI may rise by 2.6% in May, compared to 2.4% in April, with the core rate expected to remain unchanged at 3.1%. These figures will be critical in shaping expectations ahead of the Fed's next policy meeting, scheduled for June 17–18.

On the European front, the European Central Bank released its annual report on the euro, noting that central banks' gold reserves have reached approximately 36,000 tonnes — near pre-Bretton Woods levels. This indicates a continued trend among central banks to bolster their gold holdings, lending support to price stability in the near term.

Against this backdrop, gold remains underpinned by a confluence of supportive factors: rising geopolitical risks, a weaker dollar, and growing expectations of a 50-basis-point interest rate cut by the Federal Reserve before year-end — all reinforcing a bullish outlook for the yellow metal in the coming period.