Gold prices in local markets witnessed a state of relative stability during Thursday's trading, despite the rise of the ounce on the global exchange, as markets await US inflation data and follow developments regarding the ceasefire between the United States and Iran, according to a report by the “Marsad al-Dhahab:” for Economic Studies.
Dr. Walid Farouk, a researcher in gold and jewelry affairs and director of the “Marsad al-Dhahab:,” stated that the price of 21-karat gold recorded about 7,200 EGP, while the global ounce rose by about $24 to reach the level of $4,744.
He added that the price of 24-karat gold reached about 8,229 EGP, and 18-karat gold recorded 6,171 EGP, while the price of the gold coin (gold pound) reached 57,600 EGP.
He pointed out that gold prices witnessed noticeable fluctuations during Wednesday's trading, as 21-karat gold opened at 7,200 EGP and rose to 7,250 EGP before closing again at the same opening level, while the ounce rose from $4,707 to touch $4,850 before retreating and closing at $4,720.
The report explained that the price gap between the local and global markets reached about 120 EGP, as gold is traded locally at a price lower than the global price by this margin.
On the silver front, the price of a gram of silver in the local market fell by about two pounds, with 999-grade recording about 133 EGP, 925-grade reaching 123 EGP, and 800-grade at 107 EGP, while the silver coin reached about 984 EGP. In contrast, the global ounce declined from $77 to $74, affected by the state of caution in the markets.
This decline in silver came with escalating geopolitical tensions after signs appeared of the fragility of the ceasefire, as Iran announced violations of the agreement following a wide-scale attack in Lebanon that resulted in deaths, prompting it to close the Strait of Hormuz again, while the United States and Israel confirmed that Lebanon is not a party to the agreement. US President Donald Trump also warned Iran against taking new escalatory steps.
Despite the continuation of the diplomatic path, with Tehran and Washington announcing the dispatch of delegations to conduct direct negotiations in Pakistan, markets are still dealing cautiously with the possibilities of the collapse of the truce, which supports the US dollar and puts pressure on the demand for precious metals in the short term.
In the local context, the annual inflation rate in Egyptian cities rose to 15.2% during March compared to 13.4% in February, with monthly inflation accelerating to 3.2%. The Egyptian pound also came under strong pressure, declining by about 10% since the outbreak of the war, coinciding with the exit of foreign investments from local debt instruments estimated at about $8 billion, according to Moody's estimates.
The government also raised fuel and gas prices by percentages ranging between 14% and 30%, in addition to increases in transport and electricity prices, amid pressures on foreign exchange resources and a decline in tourism and Suez Canal revenues.
The weakness of the currency leads to an increase in the cost of imports, which feeds inflationary pressures, especially with Egypt's reliance on imports to meet a large part of its needs, particularly in the energy sector.
Farouk confirmed that these factors combined reinforce the upward trend for gold prices locally, as high inflation leads to the erosion of the pound's purchasing power, pushing individuals to hedge through gold, while the decline of the currency contributes directly to raising local prices as a result of pricing gold in dollars.
He added that the increase in energy and transport prices raises production and import costs, which is reflected in gold prices in terms of both workmanship fees (Masnaia) or operational costs, while the exit of foreign investments and pressures on foreign exchange enhance the state of uncertainty, supporting investment demand for gold as a tool for preserving value, and making it likely that prices will continue to rise locally even with global ounce fluctuations.
Globally, gold continued its sideways movement above the $4,700 per ounce level, with a temporary pause in the downward wave that began from its highest level in three weeks, as investors await the impact of the ceasefire on inflation rates and interest policies.
Geopolitical uncertainty remains a key factor in gold movements, as skepticism about the sustainability of the truce supports the US dollar, which limits gold's gains; however, less hawkish trends from the Federal Reserve limit the dollar's strength and provide relative support for the precious metal.
Regional tensions also increased after Israeli raids on Lebanon and Iran's announcement of the re-closure of the Strait of Hormuz, with threats to withdraw from the ceasefire, which limits optimism in the markets and strengthens the dollar at the expense of gold.
Nevertheless, Farouk believes that gold's movement remains restricted by uncertainty factors, but any sustainable calm may contribute to easing inflationary pressures and support trends toward cutting interest rates, which would be positive for gold in the medium term.
Markets are awaiting the release of US inflation data, especially the Personal Consumption Expenditures (PCE) index and the Consumer Price Index (CPI), due to their direct impact on US monetary policy trends, and consequently on the movement of the dollar and gold. In this context, minutes of the Federal Open Market Committee meeting showed a tendency to keep interest rates high for a longer period in light of inflation risks resulting from energy shocks, with an expectation of one interest rate cut by the end of this year and another in 2027, without clarity on the timing of implementation.
Despite recent pressures on gold due to high oil prices and geopolitical tensions, which pushed prices to decline from levels exceeding $5,300 to about $4,400, the “Marsad al-Dhahab:” confirms that the structural factors supporting the precious metal are still in place.
These factors consist of trends toward weakening global currencies and an increasing move away from the dollar, in addition to shifts toward a multipolar global system and rising levels of debt and defense spending in major economies, which enhances the demand for gold as a hedging tool.
Although gold may not perform the role of a safe haven efficiently in the short term during periods of acute tension due to investors' rush toward liquidity and rising interest rate expectations, it is poised to regain its momentum as short-term pressures subside, while maintaining its status as one of the most important tools for hedging against geopolitical and financial risks in the long run.
Follow the latest news on Google News
