Gold prices in the local market recorded slight gains during Saturday’s trading, coinciding with the weekend closure of global exchanges, after bullion posted a weekly loss of about 2%. The decline was driven by a stronger U.S. dollar and rising U.S. Treasury yields, as markets shifted toward liquidity amid escalating tensions in the Middle East, according to a report issued by the iSagha platform.
Saeed Imbabi, Executive Director of the platform, said that the price of 21-karat gold increased by about EGP 5 to reach EGP 7,225 per gram, while gold fell by about $107 over the week on the global market, closing at $5,172 per ounce.
Imbabi added that 24-karat gold recorded EGP 8,257 per gram, while 18-karat gold reached EGP 6,193 per gram. Meanwhile, the gold pound coin approached EGP 57,800.
Sharp volatility amid geopolitical tensions
Precious metals experienced significant volatility during the week following the shock and uncertainty triggered by the joint U.S.–Israeli strikes on Iran. Gold initially surged to touch a record high near $5,420 per ounce early in the week before retreating as traders took profits and awaited broader market reactions to the potential consequences of a new Middle East conflict.
As the week progressed, the U.S. dollar, oil, and major global markets were influenced by daily developments from the region. However, gold largely moved sideways as metals traders lacked clearer insight into the medium-term implications of the conflict compared with earlier in the week.
Safe-haven pattern failed to fully materialize
Gold traders closed what many described as a disappointing week, as the metal failed to deliver the classic safe-haven performance expected by many investors.
The week began with a familiar reaction. Following the U.S. and Israeli missile strikes on Iran as markets opened Sunday evening, gold prices quickly surged to around $5,400 per ounce. However, the rally was short-lived as heavy selling pressure emerged, with prices retreating rapidly as traders locked in profits.
Historically, safe-haven rallies in gold are often difficult to sustain. Markets tend to react quickly to geopolitical shocks, but once the initial wave of concern fades, traders typically refocus on broader macroeconomic forces.
Strong dollar pressures gold
Despite intensifying geopolitical tensions, gold faced a significant headwind from the strength of the U.S. dollar, along with expectations that the Federal Reserve may have limited room to ease monetary policy in the near term.
The Middle East conflict pushed energy prices higher, raising concerns about renewed inflationary pressures. Higher oil prices could impact the global economy by increasing transportation and production costs. If inflation persists, central banks may be forced to maintain restrictive or neutral monetary policies even as economic growth slows.
For the Federal Reserve, this presents a difficult challenge. Persistent inflation risks could prevent policymakers from cutting interest rates as quickly as markets had hoped.
Higher interest rates and Treasury yields typically support the U.S. dollar and increase the opportunity cost of holding non-yielding assets such as gold.
Structural support for gold in the long term
Despite these short-term pressures, gold continues to hold historically elevated support levels, suggesting that underlying demand remains strong.
Analysts increasingly point to structural factors that may limit how long interest rates can remain high. With global government debt levels rising, sustained increases in borrowing costs could place heavy pressure on public finances. At some point, central banks may be forced either to cut rates or intervene in bond markets to maintain economic stability.
Market expectations for the conflict
For now, global financial markets do not appear to be pricing in a prolonged geopolitical crisis. Some analysts expect the recent military escalation to remain relatively contained, allowing markets to gradually stabilize once tensions ease.
However, the longer the conflict persists, the greater the risk that broader financial uncertainty could return, potentially driving investors back toward gold as a hedge against geopolitical and economic risks.
Structural shifts in the global financial system
Many analysts believe gold’s long-term outlook remains tied to deeper structural changes in the global economy, including deglobalization, geopolitical fragmentation, and the growing use of economic policy as a strategic tool.
In this environment, countries are increasingly reassessing their financial alliances and reserve strategies. Gold remains one of the few globally liquid assets that carries neither direct political risk nor counterparty risk.
U.S. economic data
U.S. nonfarm payroll data for February disappointed expectations, with the economy losing more than 92,000 jobs, compared with forecasts for a gain of around 59,000 jobs. The unemployment rate rose slightly to 4.4%, though it remained below the Federal Reserve’s 2026 projection of 4.5%.
Meanwhile, U.S. retail sales fell by 0.2% month-on-month in January, mainly due to weaker auto sales linked to winter weather disruptions. Economists had expected a 0.3% decline, making the report slightly better than anticipated but still signaling weakening household consumption for the second consecutive month.
Following the data release, traders increased their expectations for Federal Reserve rate cuts to about 43 basis points by the end of the year, up from 35 basis points the previous day, according to Prime Market Terminal data.
Federal Reserve officials also delivered mixed messages. Kansas City Fed President Jeffrey Schmid noted that companies are not hiring workers, while Governor Steven Miran cautioned against drawing strong conclusions from a single month of employment data, describing current policy as imprecise and highly restrictive.
Mary Daly, President of the San Francisco Federal Reserve, said February’s employment data were disappointing and undermined the narrative of a stable labor market. However, she added that interest rates would remain unchanged for now while policymakers gather more information.
Against this backdrop, traders expect the Federal Reserve to leave interest rates unchanged at its upcoming meeting on March 17–18, with market attention focusing on updates to the “dot plot” in the Summary of Economic Projections.
China continues to build gold reserves
China continued to increase its gold reserves in February, extending its buying streak to 16 consecutive months.
According to data from the People’s Bank of China, the country’s gold holdings rose by about 30,000 troy ounces during the month, bringing total reserves to 74.22 million troy ounces. The buying cycle began in November 2024.
Despite recent market volatility, gold has surged strongly in recent weeks, surpassing the $5,000-per-ounce level. The rally has been driven largely by increased demand for safe-haven assets following the military escalation between the United States and Israel on one side and Iran on the other, which intensified geopolitical risks in the Middle East.
Meanwhile, the World Gold Council noted that central bank gold purchases slowed at the start of the year. According to a recent report, net purchases reached only 5 tonnes in January, compared with a monthly average of 27 tonnes over the past 12 months.
Marissa Salim, an analyst at the Council, said sharp price volatility and the holiday season may have prompted some central banks to temporarily pause purchases. However, she added that ongoing geopolitical tensions could encourage central banks to continue building gold reserves through 2026 and beyond.
Although some countries have discussed reducing reserves, purchases still outweigh sales. Poland’s central bank governor — whose country is the world’s largest publicly disclosed gold buyer — has suggested the possibility of selling part of the reserves to finance defense spending.
Russia and Venezuela have also sold some gold in recent months, but the overall trend among central banks continues to favor increasing reserves rather than reducing them.
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