Gold prices declined in both the Egyptian market and global exchanges during Thursday’s trading, as bullion gave up part of the gains recorded after the release of U.S. inflation data. Investors shifted their attention back to the risk that interest rates could remain elevated for longer amid rising oil prices and escalating tensions in the Middle East.
The price of 21-karat gold in Egypt fell by around EGP 35 compared with Wednesday’s close, reaching approximately EGP 5,815 per gram. Meanwhile, gold declined by about $24 in global markets to trade near $4,033 per ounce, according to World Gold Council data available at the time of writing.
The price of 24-karat gold stood at around EGP 6,646 per gram, while 18-karat gold reached approximately EGP 4,984. The gold pound was priced at about EGP 46,520.
Gold prices in the local market had fallen by around EGP 30 during Wednesday’s session. The price of 21-karat gold opened at EGP 5,880 per gram, declined to EGP 5,820, then recovered to EGP 5,880 before closing at EGP 5,850.
In global markets, gold traded within a narrow range on Wednesday. The ounce opened at $4,057, touched a high of $4,065, and closed near its opening level before returning to losses during Thursday’s session.
Gold declined despite U.S. data showing that inflation pressures eased in June. Those figures had supported a rise of more than 2% in bullion prices on Tuesday, but their impact weakened as markets focused on the sharp increase in oil prices and its possible consequences for U.S. inflation.
Oil prices have risen by more than 10% since the beginning of the week, reviving fears of another inflationary wave. Continued increases in energy costs could slow the decline in inflation and encourage the Federal Reserve to keep interest rates elevated for longer.
Gold is currently facing two opposing forces. Geopolitical tensions are supporting demand for safe-haven assets, while the rise in oil prices caused by those tensions is increasing inflation expectations and strengthening the case for tighter monetary policy. This places pressure on gold because it does not generate interest income.
Investors are therefore focusing not only on the geopolitical dimension of the conflict, but also on its effect on energy markets, inflation, monetary policy and bond yields. This helps explain why gold has weakened despite persistent global uncertainty.
Gold also faced pressure from a steady U.S. dollar and elevated Treasury yields, as investors continued to reassess the outlook for U.S. monetary policy following the latest inflation figures.
The Dollar and Local Premium Limit the Decline in Egypt
In the Egyptian market, the rise in the U.S. dollar against the pound during the week, together with the local price premium, helped prevent the full decline in global gold prices from being reflected domestically.
The dollar has risen by nearly EGP 2 from its lowest levels at the beginning of July, when it traded below EGP 49, before moving above EGP 50 during the current week.
The increase in the exchange rate provided direct support to local gold prices. The price of gold in Egypt is mainly determined by three factors: the international gold price, the U.S. dollar exchange rate against the Egyptian pound, and the local market premium.
The premium on 21-karat gold reached around EGP 90 per gram, according to local market calculations, helping domestic prices remain relatively stable despite the decline in the international ounce price.
The Egyptian market therefore did not respond to the global downturn at the same pace, as the stronger dollar and the local premium offset part of the decline in international prices.
A 1% rise in the dollar exchange rate, with other factors remaining unchanged, leads to a similar increase in the local value of gold. As a result, gold may decline globally while falling by a smaller percentage in Egypt, or even remain stable if the rise in the exchange rate is sufficient to offset the global losses.
Markets Monitor the Federal Reserve
Markets are awaiting comments from Federal Reserve officials, along with new U.S. economic data, for further indications about the strength of the economy and the direction of interest rates during the second half of the year.
Any data showing slower economic activity could support gold by lowering bond yields and weakening the dollar. Strong economic data or hawkish comments from Federal Reserve officials could keep pressure on the precious metal.
Several global investment institutions still maintain a positive long-term outlook for gold despite the current volatility. Their view is supported by continued central-bank purchases, the growing trend toward reserve diversification, and sustained investment demand during price declines.
Invesco believes that the fundamental factors supporting gold remain in place, particularly central-bank buying and rising global debt levels. However, the institution expects gold’s performance over the coming months to remain closely linked to U.S. inflation, oil prices and Federal Reserve decisions.
Bank of America has lowered its average gold price forecast for 2026 to around $4,360 per ounce, reflecting expectations that restrictive monetary policy may remain in place for longer. Nevertheless, the bank still expects prices to move higher over the longer term as the monetary-tightening cycle ends and official-sector demand remains strong.
Gold’s direction in the coming period will remain tied to developments in oil prices, U.S. inflation, Federal Reserve policy and the U.S. dollar, in addition to central-bank purchases and geopolitical developments.
The Egyptian market will also remain sensitive to changes in the dollar exchange rate and the local premium, both of which have limited the full impact of the decline in global gold prices during the current week.
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