Random Pricing and Declining Dollar Pressure Local Gold Market

Gold prices in the local markets declined on Tuesday, despite relative stability in global ounce prices, amid escalating tensions between Iran and Israel and anticipation of the U.S. Federal Reserve’s decision regarding interest rates.

Gold prices dropped by EGP 20 during Tuesday's trading, compared to the end of yesterday’s session, with the price of 21-karat gold falling to EGP 4,810 per gram. Meanwhile, the global ounce price remained stable at $3,385.

The price of 24-karat gold recorded EGP 5,497 per gram, while 18-karat gold stood at EGP 4,123, and 14-karat gold was priced at approximately EGP 3,207. The price of the gold pound (eight grams of 21-karat gold) reached EGP 38,480.

On Monday, local gold prices had already declined by EGP 70. The 21-karat gram opened at EGP 4,900 and closed at EGP 4,830. Globally, the ounce dropped by $45, starting the day at $3,430 and ending at $3,385.

The decline in local gold prices, despite the global ounce stability, was driven by the depreciation of the U.S. dollar in local banks, in addition to the speculative and random pricing practices that dominated the local market in recent days. This has widened the price gap between local and global markets to nearly EGP 200 per gram.

On the international front, markets witnessed relative stability, driven by ongoing safe-haven demand due to rising geopolitical tensions in the Middle East, and ahead of the Federal Reserve’s interest rate decision.

Military escalation between Iran and Israel intensified after American media outlets reported the assassination of senior Iranian Revolutionary Guard commander Ali Shadmani by the Israeli army. In retaliation, Iranian forces launched missile strikes targeting the Mossad headquarters, according to CNBC.

In addition to geopolitical unrest, the declining U.S. Dollar Index has supported gold prices. A weaker dollar encourages investors to increase their gold holdings since gold is priced in dollars, making it more attractive when the greenback loses value.

Investors are now awaiting the Federal Reserve’s monetary policy announcement on Wednesday, with expectations that interest rates will remain unchanged within the current range of 4.25%–4.50%.

The Federal Open Market Committee (FOMC) is expected to outline its future monetary policy direction during Fed Chair Jerome Powell’s press conference, alongside the release of the "dot plot," which reflects committee members' projections for future interest rate paths.

A recent study by the World Gold Council, conducted between February 25 and May 20, 2025, with participation from 73 central banks, revealed that 76% of respondents plan to increase their gold holdings over the next five years, up from 69% in last year’s survey. Additionally, 95% of participants expect global gold reserves to grow over the coming year — the highest percentage since the study’s inception.

The study also indicated a growing trend toward reducing the share of U.S. dollars in central bank reserves, with around 75% of participants intending to cut their dollar holdings over the next five years, compared to 62% in the 2024 survey.

Meanwhile, Citibank has revised its short- and long-term forecasts for gold prices downward, indicating that the precious metal could fall below $3,000 per ounce by late 2025 or early 2026, due to weakening investment demand and improving global economic growth prospects, according to a research note released on Monday.