Marsad Al Dahab: Stronger Dollar and Rising Oil Prices Weigh on Gold as Markets Await U.S. Jobs Data

Marsad Al Dahab reported that gold prices declined in both the Egyptian local market and the global bullion market during Monday's trading, pressured by the strengthening U.S. dollar and rising expectations that the Federal Reserve will continue tightening monetary policy. Meanwhile, higher oil prices following renewed tensions between the United States and Iran have fueled inflation concerns, prompting markets to price in a more hawkish interest-rate outlook.

The price of 21-karat gold fell by around EGP 100 during Monday's session to approximately EGP 5,680 per gram, compared with the close of last week's trading, while spot gold declined to around US$4,038 per ounce, according to World Gold Council data at the time of writing.

Meanwhile, 24-karat gold traded at approximately EGP 6,492 per gram, 18-karat gold at EGP 4,869 per gram, while the gold sovereign reached EGP 45,440.

The decline in domestic gold prices was driven primarily by lower global gold prices, coupled with the narrowing premium between local prices and fair value, which has fallen to around EGP 100, while the official exchange rate remained stable near EGP 49.27 per U.S. dollar, according to the Central Bank of Egypt. This has reduced the local market's ability to withstand the ongoing global sell-off.

The shrinking local premium also reflects weaker hedging activity among traders compared with previous months, alongside relatively subdued demand, making domestic prices more responsive to movements in international gold prices.

During the previous week, gold prices in Egypt declined by approximately EGP 240, with 21-karat gold opening the week at EGP 6,020 before closing at EGP 5,780. Globally, gold fell by around US$67 per ounce, from US$4,155 to US$4,088.

On a broader time frame, the local gold market posted a weekly loss of approximately 4%, while June losses are approaching EGP 1,085 per gram, after 21-karat gold opened the month at EGP 6,765, marking one of the sharpest correction phases witnessed by the Egyptian market this year.

Since the beginning of 2026, 21-karat gold has lost approximately EGP 150 compared with its opening price of EGP 5,830, effectively erasing all of its gains for the year. Current prices are also about EGP 1,920, or more than 25%, below the all-time high of EGP 7,600 recorded on March 2.

In global markets, spot gold has declined by roughly US$502 since the beginning of June after opening the month near US$4,540 per ounce. It is also down around US$280 from its opening level of US$4,318 at the start of 2026, wiping out all of its year-to-date gains.

Gold is currently trading about US$1,588, or more than 28%, below its all-time high of US$5,626 per ounce recorded on January 29, highlighting the depth of the current correction in global bullion markets.

According to Marsad Al Dahab, gold remains under pressure from a combination of factors, most notably the strength of the U.S. dollar, rising expectations of higher interest rates, and stronger yields on dollar-denominated assets, all of which reduce the appeal of non-yielding assets such as gold.

At the same time, rising oil prices have complicated the outlook. Renewed geopolitical tensions between the United States and Iran have reignited inflation concerns, leading investors to anticipate a more hawkish Federal Reserve, despite gold's traditional role as a hedge against inflation.

However, the relationship between inflation and gold is not always straightforward. While higher inflation typically supports gold prices, inflation that leads to higher interest rates tends to weigh on the precious metal, as rising bond yields and a stronger U.S. dollar increase the opportunity cost of holding a non-interest-bearing asset.

Markets are now closely watching this week's key U.S. labor market data, particularly the Nonfarm Payrolls report, as well as remarks by Federal Reserve Chair Kevin Warsh during the European Central Bank Forum in Sintra. These events are expected to provide important signals regarding the future direction of the U.S. dollar, Treasury yields, and gold prices.

Despite current headwinds, international institutions remain divided over gold's longer-term outlook. UBS expects gold to trade within a US$3,850–4,000 range in the short term if dollar strength and elevated yields persist. Meanwhile, J.P. Morgan maintains a constructive long-term outlook, forecasting a return to levels above US$5,000 per ounce over the next twelve months should the Federal Reserve eventually pivot toward monetary easing.

Central bank demand continues to provide one of the strongest long-term support factors for gold. According to the latest World Gold Council survey, 45% of central banks intend to increase their gold reserves over the next twelve months, while 89% of respondents expect global central bank gold holdings to continue rising despite current price pressures.

Marsad Al Dahab believes that the current correction is driven by a combination of factors rather than a single catalyst, including the stronger U.S. dollar, higher interest-rate expectations, and the narrowing premium in Egypt's local market, making domestic prices more closely aligned with global gold movements than in previous periods.

The report expects gold prices over the coming days to remain primarily influenced by three key variables: the direction of the U.S. dollar, U.S. labor market data, and oil prices. Strong employment figures would reinforce expectations of further Federal Reserve tightening, potentially putting additional pressure on gold. Conversely, signs of labor market weakness could provide the precious metal with room for a partial recovery.

Domestically, gold prices are expected to remain closely linked to international bullion prices, the U.S. dollar exchange rate, and the size of the local premium. With that premium continuing to narrow, the Egyptian market is becoming increasingly sensitive to declines in global prices, while stronger demand or a widening premium could help moderate further losses.

Marsad Al Dahab believes that, despite the severity of the current correction, it does not alter gold's long-term upward trajectory. However, investors should continue managing liquidity prudently and adopt a gradual accumulation strategy until there is greater clarity regarding the Federal Reserve's monetary policy during the second half of the year.