Gold Swings Between Dollar Pressure ,Trump's Surprises

Gold prices fell slightly in local markets during trading on Saturday, coinciding with the global stock market's weekly holiday. The ounce ended the week with a 2% decline, amid a combination of mixed economic data and the political controversy surrounding tariffs in the United States.

Gold prices fell in local markets by about 15 Egyptian pounds during trading today, compared to yesterday's close. The price of a gram of 21-karat gold reached 4,590 Egyptian pounds, while the price of an ounce of gold closed the week at $3,358, a decline of $68.

The price of a gram of 24-karat gold reached 5,246 Egyptian pounds, the price of a gram of 18-karat gold reached 3,934 Egyptian pounds, the price of a gram of 14-karat gold reached about 3,060 Egyptian pounds, and the price of a pound of gold reached about 36,720 Egyptian pounds. Gold prices in local markets fell by EGP 15 during trading on Friday. The price of a gram of 21-karat gold opened at EGP 4,620 and closed at EGP 4,605. Meanwhile, an ounce fell by $27, opening at $3,317 and closing at $3,290.

The slight decline in gold prices came despite a decline in US Treasury yields, supported by a firmer dollar, which limited gold's ability to achieve further gains. He stated that recent US inflation data, particularly the core personal consumption expenditures index, showed a decline in the pace of inflation, with the annual reading for April reaching 2.5% compared to 2.6% in March. Meanwhile, the overall inflation rate declined to 2.1% compared to 2.3% the previous month, increasing market expectations of an expected interest rate cut in 2025.

Despite signs of a slowdown in inflation, gold prices failed to record a tangible recovery. The recovery in the US consumer confidence index, issued by the University of Michigan, from 50.8 to 52.2, and the improvement in GDP growth expectations, according to the Atlanta Federal Reserve, from 2.2% to 3.8%, also contributed to supporting the dollar's strength and reducing investor appetite for gold.

Former US President Donald Trump reignited trade tensions following his statements accusing China of not adhering to the Swiss trade agreement, asserting that "China has completely violated the agreement," he said. Following these statements, markets witnessed noticeable confusion, with stock indices declining, while the dollar regained some momentum, leading to fluctuations in gold prices. In a notable development, a US Federal Appeals Court reinstated most of the tariffs Trump had previously imposed on April 2, known as "Liberation Day," after the International Trade Court invalidated them as illegal.

Gold prices also jumped to over $3,363 per ounce, their highest level since early April, following Trump's surprise announcement of raising tariffs on imports from the European Union. However, he reversed the decision on Sunday evening, postponing implementation until July 9, based on what he said was a request from European Commission President Ursula von der Leyen.

Despite recent volatility, data confirms that gold remains one of the most prominent beneficiaries of escalating geopolitical tensions and financial uncertainty, especially in light of expectations of interest rate cuts and increased risks associated with the dollar and paper currencies. The US core personal consumption expenditures (PCE) index for April showed an ongoing deflationary trend, driven by the Federal Reserve's tightening interest rates. The reading reached 2.5% year-on-year, down from 2.6%. The headline inflation rate was 2.1% year-on-year, lower than March's 2.3% increase.

The University of Michigan Consumer Confidence Index improved in May from 50.8 to 52.2, exceeding estimates in its final reading. It's worth noting that inflation expectations have declined. Over the next 12 months, the forecast fell from 7.3% to 6.6%, and over the next five years, it fell from 4.6% to 4.2%.

Following the release of the data, the Atlanta Federal Reserve's preliminary GDP Now reading for economic growth for the second quarter of 2025 rose sharply from 2.2% to 3.8%. Federal Reserve officials announced their findings on Thursday, confirming that monetary policy is in good shape and that it will take time to see a shift in the balance of risks related to the Fed's dual mandate.

San Francisco Federal Reserve President Mary Daly emphasized that the labor market remains strong, but that reaching the 2% inflation target may not be achieved before the end of 2025, increasing the likelihood of the Fed cutting interest rates twice, as markets currently expect.

While markets are pricing in a 52 basis point easing by the end of the year, observers believe that Trump's continued dominance of the political scene, the return of tariffs, and conflicting economic data are all factors that will enhance gold's appeal as a risk hedge.