Prices Decline Locally and Globally Under Dollar Strength and Rising Geopolitical Tensions

Gold prices declined in both local markets and global exchanges, pressured by the strength of the U.S. dollar and renewed geopolitical tensions, which pushed oil prices higher and reignited inflation concerns, according to the weekly report issued by the Marsad al-Dhahab for Economic Studies.

Dr. Walid Farouk, gold and jewelry expert and head of the Marsad al-Dhahab, stated that local gold prices fell by about 20 Egyptian pounds compared to the close of last week’s trading, with 21-karat gold recording around EGP 7,010 per gram. Meanwhile, the global ounce dropped by about $36 to $4,796.

He added that 24-karat gold recorded approximately EGP 8,011 per gram, 18-karat reached EGP 6,009, while the gold pound stood at about EGP 56,080.

Farouk noted that local prices remain below global levels by roughly EGP 25, amid weak demand and a growing shift toward exports.

On a weekly basis, local gold prices declined by approximately EGP 130, with 21-karat gold opening the week at EGP 7,160 and closing at EGP 7,030. In contrast, the global ounce rose by about $82 during the week, starting at $4,750, touching $4,900, and ending at $4,832, according to data from the World Gold Council.

Despite nearing record levels, gold prices fell by up to 1.9%, trading around $4,790 per ounce, weighed down by the stronger dollar and rising U.S. Treasury yields, which reduced the appeal of non-yielding assets like gold.

Market volatility intensified amid escalating tensions in the Middle East, particularly with stalled peace talks between the United States and Iran and ongoing tensions around the Strait of Hormuz, which disrupted shipping activity and drove oil prices higher.

These developments increased uncertainty, with U.S. 10-year Treasury yields rising by about 0.5% alongside gains in the dollar index, adding further pressure on gold.

In this context, Federal Reserve Governor Christopher Waller stated that geopolitical tensions could push inflation higher in the short term, while a swift resolution to the conflict could open the door for interest rate cuts later this year.

Despite current pressures, markets still price in roughly a 40% probability of a Federal Reserve rate cut by year-end, according to the CME FedWatch tool. This could limit further dollar strength and provide medium-term support for gold.

Analysts at OCBC Bank noted that gold remains closely tied to risk sentiment, expecting prices to stabilize near current levels, with resistance between $4,850–$4,900 and support at $4,714 and $4,650–$4,670. They continue to favor buying on dips rather than chasing rallies.

On the demand side, gold consumption in India—one of the world’s largest markets—remained weak during a key buying season, as record-high prices dampened jewelry purchases, limiting the impact of modest investment demand and weighing on global prices.