Local Gold Market Prices in Dollar Risks Despite Ongoing Global Weakness

Marsad Al Dahab reported that gold prices in Egypt edged higher on Saturday despite the closure of global markets for the weekend, while international gold posted a weekly decline of 1.5%, marking its sixth consecutive week of lower or flat weekly closes. The precious metal continues to face pressure from the U.S. Federal Reserve’s hawkish monetary policy, a stronger U.S. dollar, and rising Treasury yields.

The observatory said that 21-karat gold rose by EGP 10 to approximately EGP 6,050 per gram, while spot gold ended the week at $4,155 per ounce, down $74 from the previous week.

Meanwhile, 24-karat gold traded at around EGP 6,914 per gram, 18-karat gold reached EGP 5,186 per gram, and the gold sovereign stood at approximately EGP 48,400.

Gold prices had already fallen on Friday, with 21-karat gold declining by EGP 45, opening at EGP 6,085 before closing at EGP 6,040. Globally, gold dropped from $4,218 to $4,155 per ounce by the end of trading.

Marsad Al Dahab noted that the Egyptian market continues to trade at a premium of nearly EGP 250 per gram above its fair value based on international prices and the official exchange rate. The premium remains supported by sustained demand for gold bars and sovereign coins, alongside precautionary buying by dealers seeking protection against global market volatility.

The report added that the domestic market has already begun pricing in the risk of a stronger U.S. dollar, reflected in an immediate EGP 100 jump in local gold prices following the close of international trading on Friday, despite only limited movement in global gold prices. This suggests that market participants expect potential pressure on Egypt’s exchange rate in the coming days.

According to the observatory, the U.S. Dollar Index will remain one of the key drivers of gold prices in the near term. Expectations that the Federal Reserve will maintain a restrictive monetary stance continue to support the dollar and U.S. Treasury yields, reducing the appeal of non-yielding assets such as gold.

The report also highlighted that stronger U.S. interest rates and a firmer dollar could encourage capital flows away from emerging markets, including Egypt, in search of higher and safer returns. Such outflows could tighten foreign currency liquidity and place additional pressure on the Egyptian pound, ultimately affecting local gold prices.

It added that a stronger dollar also raises import costs and fuels inflationary pressures, potentially prompting the Central Bank of Egypt to maintain a cautious monetary policy aimed at preserving market stability and supporting pound-denominated assets.

Marsad Al Dahab said the current correction represents one of the sharpest declines since the beginning of June. 21-karat gold has lost around EGP 715 per gram, falling from EGP 6,765 at the start of the month to around EGP 6,050, while international gold has declined by approximately $385 per ounce, dropping from $4,540 to $4,155.

As a result, gold's gains in the Egyptian market since the beginning of 2026 have narrowed to around EGP 220 per gram, or approximately 3.8%, after reaching a peak increase of nearly EGP 1,770 on 2 March. On the global market, gold is now down $163 per ounce, also representing a decline of roughly 3.8% since the start of the year.

Marsad Al Dahab believes that the recent declines in gold and silver prices primarily reflect the market’s repricing of U.S. monetary policy expectations after the Federal Reserve reinforced the likelihood of keeping interest rates higher for longer, while leaving the door open for further tightening if inflationary pressures persist. This has strengthened the U.S. dollar and pushed Treasury yields higher, increasing pressure on gold as a non-yielding asset.

The observatory emphasized that the current decline does not signal panic selling or a broad market exit. Instead, it reflects portfolio repositioning and gradual risk reduction, characteristics typically associated with healthy market corrections rather than the beginning of a prolonged bear market.

Despite the short-term headwinds, the structural fundamentals supporting gold remain intact. Continued central bank purchases aimed at diversifying reserves away from the U.S. dollar, rising global debt levels, and persistent geopolitical uncertainty are all expected to provide long-term support for gold, even as short-term price movements remain closely tied to U.S. monetary policy expectations.

This assessment is broadly consistent with Goldman Sachs, which recently lowered its year-end gold price target to $4,900 per ounce, citing reduced expectations for U.S. interest rate cuts. However, the bank maintained its constructive long-term outlook, supported by continued central bank demand despite the likelihood of near-term price pressure.