Local Gold Prices Up 7.4% Since the Beginning of the Year

Marsad Al Dahab reported that gold prices in the local market rose during Saturday's trading, coinciding with the weekly closure of global markets, following a highly volatile week in which gold ended with a 2.5% decline amid rising U.S. inflation, a stronger U.S. dollar, higher Treasury yields, and growing expectations that the Federal Reserve will maintain its restrictive monetary policy for an extended period.

The observatory stated that the price of 21-karat gold increased by EGP 15 compared with Friday’s close, reaching approximately EGP 6,260 per gram. Meanwhile, the global gold price declined by about $109 during the week, opening at $4,328 per ounce, falling to a weekly low of $4,023, and ultimately closing at $4,219 per ounce, according to World Gold Council data.

The price of 24-karat gold reached approximately EGP 7,154 per gram, while 18-karat gold traded at EGP 5,366 per gram. The gold sovereign recorded EGP 50,080.

Gold prices had fallen by around EGP 25 during Friday’s trading session, with 21-karat gold opening at EGP 6,270 and closing at EGP 6,245. Global gold prices stabilized near $4,219 per ounce by the end of the week.

The recent decline has reduced gold’s gains in the Egyptian market since the beginning of the year to approximately EGP 430 per gram, representing an increase of 7.4%. At the same time, gold has recorded losses of about $99 per ounce, or 2.3%, since the start of 2026.

Markets experienced significant volatility throughout the week. Gold initially advanced on heightened geopolitical concerns in the Middle East and tensions surrounding the Strait of Hormuz before retreating sharply after U.S. inflation data exceeded market expectations.

Data showed that the U.S. Consumer Price Index (CPI) rose to 4.2% year-on-year in May, while the Producer Price Index (PPI) increased by 1.1% month-on-month and 6.5% year-on-year. These figures reinforced expectations that U.S. interest rates will remain elevated for a longer period.

Higher inflation prompted investors to reassess expectations for Federal Reserve policy, resulting in a stronger U.S. dollar and rising Treasury yields, which increased pressure on gold as a non-yielding asset.

Market estimates also indicate declining expectations for interest-rate cuts at upcoming Federal Reserve meetings, with growing bets that restrictive monetary policy could remain in place through the end of the year, making it one of the key headwinds facing gold prices.

Despite these pressures, official demand from central banks remains one of the strongest long-term support factors for gold. According to World Gold Council data, net central bank purchases reached 244 tonnes during the first quarter of 2026, one of the highest levels of official demand recorded in recent years, as many countries continue to strengthen their gold reserves as part of broader reserve diversification strategies and efforts to reduce dependence on foreign currencies.

Central bank purchases continue to provide structural support for the market and help limit the risk of prolonged and severe declines in gold prices, despite pressure from higher interest rates and a stronger dollar.

Marsad Al Dahab believes that inflation remains the single most influential factor driving gold prices at the current stage. While inflation traditionally supports gold as a store of value and hedge against rising prices, markets are currently interpreting persistent inflation differently. Elevated inflation has strengthened expectations that U.S. interest rates will remain higher for longer, creating additional pressure on gold and pushing prices toward the $4,000-per-ounce level.

This comes as the U.S. labor market continues to show resilience and inflationary pressures remain elevated, supporting the Federal Reserve’s commitment to maintaining a restrictive monetary stance. Higher interest rates increase the attractiveness of bonds and other income-generating assets relative to gold.

The observatory believes investors should focus not only on interest rates but also on the pace of inflation. If inflation continues to rise faster than interest rates, the appeal of fixed-income assets could gradually diminish, allowing gold to regain part of its safe-haven status and inflation-hedging appeal.

This scenario becomes increasingly important given the challenges facing the U.S. economy, including rising government debt and widening fiscal deficits, which leave policymakers balancing inflation control against economic growth objectives.

Although these factors do not necessarily imply an immediate surge in gold prices, persistently elevated inflation could gradually alter market dynamics. The same factor currently weighing on gold through expectations of higher interest rates may eventually become one of the strongest drivers supporting the precious metal if inflationary pressures persist and concerns over fiscal and economic stability intensify.

Looking ahead, markets will closely monitor a series of key economic releases and central bank decisions next week, including the Federal Reserve’s interest-rate decision, monetary policy announcements from the Bank of Japan, the Swiss National Bank, and the Bank of England, as well as U.S. retail sales, housing starts, building permits, and weekly jobless claims. These developments are expected to play a critical role in determining the direction of gold and global financial markets in the coming weeks.