Gold prices in local markets and the global exchange recorded slight gains at the start of Tuesday’s trading, supported by a weaker U.S. dollar and cautious investor sentiment amid ongoing geopolitical uncertainty—particularly ahead of the deadline set by U.S. President Donald Trump for Iran regarding the Strait of Hormuz, according to a report by the Marsad al-Dhahab for Economic Studies.
Dr. Walid Farouk, gold and jewelry analyst and head of the Marsad al-Dhahab, said local gold prices rose by about 10 Egyptian pounds compared to yesterday’s close, with 21-karat gold reaching EGP 7,140 per gram. Globally, gold gained about $15, with the ounce hitting $4,665.
He added that 24-karat gold recorded about EGP 8,160 per gram, while 18-karat stood at EGP 6,120. The gold pound (8 grams of 21-karat) reached approximately EGP 57,120.
The report noted that local gold prices are currently trading at a discount of around EGP 25 compared to the global price, due to weak domestic demand and continued market uncertainty.
On the silver front, prices rose by about EGP 3 per gram, with 999 purity at EGP 132, 925 at EGP 123, and 800 at EGP 106. The silver pound reached EGP 984, while the global ounce declined from $73 to $72.
Moody’s affirmed Egypt’s sovereign credit rating at Caa1 with a cautious outlook, reflecting ongoing challenges related to high debt levels, weak foreign currency inflows, and risks of short-term capital outflows.
The agency noted that the Central Bank of Egypt continues to pursue a tight monetary policy while maintaining exchange rate flexibility, despite pressures stemming from capital outflows estimated at around $8 billion, rising energy costs, and an increasing import bill.
These factors are reflected in the local gold market, where currency weakness pushes prices higher, while elevated interest rates partially limit gains. However, they do not fully offset pressure on the Egyptian pound, making movements in the dollar and capital flows key drivers for gold prices.
Traders remain cautious amid signs of potential escalation in the Middle East, particularly tensions involving Iran and the Strait of Hormuz, reinforcing uncertainty in precious metals markets.
Oil prices rose to stabilize above $110 per barrel, increasing inflation concerns. While inflation typically supports gold, higher interest rates reduce its appeal as a non-yielding asset.
U.S. Treasury yields also climbed, with the 2-year yield surpassing 3.85% and the 10-year yield approaching 4.33%, adding pressure on gold prices.
Federal Reserve officials continue to signal that inflation remains a priority, reinforcing expectations that interest rates will stay higher for longer, limiting gold’s upside.
According to the FedWatch tool, markets are not expecting rate cuts this year, which reduces the attractiveness of gold despite geopolitical support.
On the economic data front, the ISM Services PMI declined to 54 in March from 56.1 in February, falling short of expectations.
Farouk explained that this decline points to a relative slowdown in economic growth, even as inflationary pressures persist due to higher energy prices and ongoing supply chain disruptions.
He added that this creates a policy dilemma for the Federal Reserve: inflation supports keeping rates high, while slowing growth may constrain further tightening.
He also noted that focus is shifting toward real interest rates, as persistently high inflation relative to interest rates tends to support gold, making the current environment favorable in the medium term despite short-term pressures.
Despite the recent pullback in gold prices, estimates suggest this reflects temporary pressures—such as rising yields, a stronger dollar, and profit-taking—rather than any weakness in underlying fundamentals.
With persistent inflation concerns, widening fiscal deficits, and continued central bank diversification into gold, the long-term outlook remains positive, with expectations of a gradual recovery in momentum.
In a related context, data from the World Gold Council showed that global economic data came in stronger than expected last week, with improved performance in China and rising manufacturing output in India, while Europe continues to face price pressures due to energy costs.
Gold-backed exchange-traded funds (ETFs) recorded inflows of around 21 tonnes at the start of April, signaling continued investment demand.
Meanwhile, data from the People’s Bank of China showed that gold purchases continued for the seventeenth consecutive month, raising reserves to 74.38 million ounces by the end of March, compared to 74.22 million ounces in the previous month.
Although the total value of reserves declined to $342.76 billion due to lower prices, continued central bank buying remains a key support factor for gold during periods of volatility.
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