Gold prices in local and global markets rose during today's trading, driven by increasing investor expectations that the U.S. Federal Reserve is heading towards further interest rate cuts in the coming period, in addition to the continuation of geopolitical tensions in the region. This is according to a report issued by the "iSagha" platform.
Saeed Embaby, the executive director of the "iSagha" online gold and jewelry trading platform, said that gold prices in the local market increased by about 50 EGP compared to the close of last Saturday's trading, with the price of 21-karat gold reaching 5,020 EGP. Globally, the price per ounce rose by 42 dollars to reach 3,727 dollars.
Embaby explained that the price of 24-karat gold reached 5,737 EGP, 18-karat gold was 4,303 EGP, while 14-karat gold reached 3,347 EGP. The price of the gold pound, however, settled at 40,160 EGP.
He pointed out that gold prices in the local market had risen by about 70 EGP last week, while the global ounce rose by 42 dollars.
Causes of the Rise and the Role of the U.S. Federal Reserve
Embaby attributed this rise to the decline of the U.S. dollar and market anticipation of inflation data scheduled for release next Friday, which is a key indicator of the Federal Reserve's monetary policy.
He added that the continuation of geopolitical tensions in the Arab region boosted demand for gold as a safe haven, pushing prices to unprecedented levels.
He noted that the rise in gold prices goes beyond the traditional economic dimension, as it reflects markets losing some of their confidence in the dollar and increasing reliance on gold as a strategic hedging tool against inflation and geopolitical risks.
Future Expectations
Embaby expects the gold price rally to continue in the coming period, supported by hints from the Federal Reserve that suggest the possibility of two additional interest rate cuts by the end of this year. Geopolitical risks stemming from the Russia-Ukraine war also remain another factor pushing investors towards gold.
Gold, as a non-yielding asset, continues to benefit from the cautious policy adopted by the Fed, as it moves near the 3,700-dollar-per-ounce level, a historic high it touched last week.
The Fed's Statements and Inflation Concerns
The Federal Reserve had cut its benchmark interest rate for the first time since December, while signaling the need for two additional cuts this year amid signs of a weak labor market. However, Fed Chairman Jerome Powell stated that inflation risks still lean to the upside, considering the recent rate cut to be part of risk management. He affirmed that he sees no need to rush to raise the rate again.
Powell noted that the Fed holds regular meetings to evaluate interest rate expectations, which pushed the U.S. dollar to its highest level in over a week during Monday's trading. Nevertheless, traders believe that the rate will fall at a much faster pace than the Fed expects, betting on a decline in the short-term rate, which currently ranges between 4.00% and 4.25%, to below 3% by the end of 2026.
Stock Markets and International Tensions
Stock markets capitalized on the optimistic mood, reaching record levels, which helped curb the pace of gold's rise during the Asian session.
On another front, investors are awaiting the U.S. Supreme Court's ruling on November 5 regarding the legality of the global tariffs imposed by U.S. President Donald Trump. A lower court had ruled that Trump exceeded his authority, but the tariffs remained in effect pending the final ruling, which adds to market tensions.
On the geopolitical front, NATO forces intercepted three Russian MiG-31 fighter jets last Friday after they entered Estonian airspace. This prompted Trump to comment on the incident, expressing his readiness to defend European Union members should Russia escalate its hostile actions, which increases global anxiety and pushes gold to gain more momentum.
This week, investors' eyes are on a set of pivotal economic data, including statements by Fed Chairman Jerome Powell tomorrow, Tuesday in Rhode Island, alongside global purchasing managers' index (PMI) data from S&P, durable goods data, unemployment claims, GDP, as well as the core consumer price index, which is the Fed's preferred measure for monitoring inflation.
Intensive statements from Fed officials are also expected to clarify the path of future monetary policy, which keeps gold at the heart of the global financial scene in the coming days.
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