Oil and Dollar Conflict Restricts Gold.. Limited Gains Despite Tensions

Gold prices witnessed limited increases in local markets and global stock exchanges during Tuesday's trading, amid a complex environment combining escalating geopolitical tensions and rising oil prices against strong pressure from a high dollar and bond yields. This situation limited the gains of the precious metal, according to a report by the "Marsad Al Dahab" for Economic Studies.

The Gold and Jewelry Researcher and Director of the "Marsad Al Dahab" stated that gold prices in the local market rose by about 20 pounds compared to yesterday's close, with 21-karat gold reaching approximately 6,900 pounds per gram. Meanwhile, the global ounce rose by about 37 dollars to reach 4,555 dollars, according to World Gold Council data at the time of writing the report. He added that 24-karat gold recorded about 7,886 pounds per gram, 18-karat reached 5,914 pounds, and the gold coin (Genieh) stood at 55,200 pounds.

Gold prices had declined by about 80 pounds during Monday's trading, where 21-karat gold opened at 6,960 pounds and closed at 6,880 pounds, while the global ounce fell by about 96 dollars, opening at 4,614 dollars and closing at 4,518 dollars. On the foreign exchange front, the dollar price in Egypt rose to approach the 54-pound level, driven by the exit of foreign investments from government debt instruments amid continued fluctuations related to geopolitical tensions.

Official data indicates that every one-pound increase in the dollar exchange rate raises the general budget burden by billions of pounds due to the escalating cost of debt service. Meanwhile, "Standard & Poor's" expects the dollar to reach about 55 pounds by the end of the current fiscal year and 60 pounds the following year, with an upward trend in the medium term.

 This limited performance of gold comes even though rising oil prices enhance inflationary fears; however, it conversely pushes central banks, led by the U.S. Federal Reserve, to adopt more hawkish monetary policies, which raises yields, strengthens the dollar, and pressures gold prices.

Tensions between the United States and Iran, especially in the Arabian Gulf and the Strait of Hormuz, remain a major factor moving the markets, as attacks on ships and threats to navigation have led to a sharp rise in oil prices, reigniting inflationary concerns. These developments bolstered expectations that interest rates will remain high for a longer period, with market estimates indicating the probability of a rate hike rising to about 35%, compared to less than 10% a few days ago, which was reflected in the rise of U.S. Treasury yields and the U.S. Dollar Index.

In contrast, U.S. economic data showed relative strength, as factory orders rose by 1.5% in March, exceeding expectations, and industrial activity continued to expand, reducing the chances of near-term rate cuts and maintaining pressure on gold. Despite these pressures, gold managed to recover from its lowest levels in more than a month to surpass 4,550 dollars, supported by ongoing geopolitical risks, although its performance remained lower than expected as a safe haven.

In this context, the "Marsad Al Dahab" report suggests that the rise of the dollar remains the most influential factor on gold in the short term, as it reduces its attractiveness and may push prices further down if the U.S. currency's upward trend continues. In the long term, expectations remain positive due to the escalating risks of monetary policy errors, high global debt levels, and continued investment demand, especially from Asian markets, with estimates suggesting gold could reach about 5,500 dollars per ounce by the first quarter of 2027.

Regarding silver, a clear divergence in trends emerges, as investment demand declines while industrial demand provides strong support, especially with the expansion of electric vehicles that consume larger quantities of silver, enhancing the long-term positive outlook for the metal. In a related context, central bank data showed a striking shift during March 2026, recording net sales of about 30 tons, driven by large exits from some countries, led by Turkey, which reduced its reserves by about 60 tons, while Russia sold about 6 tons, according to the Gold Council report issued today.

Conversely, several countries continued to bolster their reserves, with Poland topping the list of buyers with about 11 tons in March, followed by Uzbekistan, Kazakhstan, and China, reflecting the continued buying trend among some central banks. This divergence in central bank behavior reflects the state of uncertainty in global markets between the need for liquidity on one hand and the desire to strengthen gold reserves as a strategic asset on the other. 

The "Marsad Al Dahab" noted that gold is currently moving in a narrow range between the support of geopolitical risks and inflation, and the pressures of the dollar and monetary policy, which keeps the chances of gold rising in the long term amid continued short-term volatility.