Gold prices declined in local markets and global exchanges during Thursday’s trading session, pressured by the strength of the U.S. dollar and rising oil prices amid renewed geopolitical tensions in the Middle East, pushing the precious metal closer to its lowest level in nearly two months, according to a report issued by the Marsad Al Dahab for Economic Studies.
The report stated that local gold prices fell by around EGP 50 compared to Wednesday’s closing levels, with 21-karat gold recording EGP 6,700 per gram, while global gold prices dropped by nearly $65, bringing the ounce to $4,575 at the time of writing.
Meanwhile, 24-karat gold recorded around EGP 7,657 per gram, 18-karat gold stood at EGP 5,743, and the gold sovereign reached approximately EGP 53,600.
The report also noted that local gold prices had already declined by EGP 45 during Wednesday’s trading, as 21-karat gold opened at EGP 6,795 and closed at EGP 6,750, while the global ounce fell by nearly $135, declining from $4,571 to $4,436.
According to the report, local gold prices remain around EGP 300 above fair value based on the global price and the official exchange rate announced by the Central Bank of Egypt.
The report attributed the resilience of local prices, despite the sharp decline in global markets, to several factors, most notably the Eid holiday, which led to the temporary closure of raw gold trading among wholesalers and manufacturers. This reduced supply and made the market more dependent on local supply-and-demand dynamics.
The report added that traders remain cautious due to fears of further price declines and difficulties in compensating for losses, in addition to severe liquidity shortages in the local market. Many market participants are awaiting the reopening of normal trading activity after the holiday period.
The report also highlighted growing concerns over a potential rise in the U.S. dollar exchange rate against the Egyptian pound amid escalating geopolitical tensions in the Middle East and changing expectations regarding U.S. monetary policy.
Globally, financial markets have become increasingly sensitive to signals from the U.S. Federal Reserve, especially amid persistent inflationary pressures fueled by rising energy prices and geopolitical instability.
Higher U.S. interest rates continue to strengthen the dollar and increase the attractiveness of U.S. Treasury yields, reducing investor appetite for non-yielding assets such as gold, despite ongoing geopolitical risks that would normally support safe-haven demand.
The report emphasized that the impact of U.S. monetary policy extends beyond global markets to emerging economies through accelerating foreign capital outflows, placing additional pressure on exchange rates and foreign currency reserves.
Egypt has recently witnessed noticeable hot money outflows estimated between $6.5 billion and $10 billion, from total foreign investments that had previously peaked between $43 billion and $45 billion. These outflows have increased pressure on the Egyptian pound and contributed to exchange rate volatility.
The report noted that the U.S. dollar surpassing EGP 53 during May 2026 reflects mounting pressures related to global capital flows and shifting expectations for U.S. monetary policy. Any further tightening by the Federal Reserve could increase pressure on local debt instruments and treasury bills.
The report stressed that the decline in global gold prices does not necessarily mean a similar decline in Egypt’s local market, as domestic gold pricing depends mainly on three factors: global ounce prices, the USD/EGP exchange rate, and local supply-and-demand conditions.
On the global front, gold prices in European markets fell to their lowest level in nearly two months, extending losses for a third consecutive session under pressure from a stronger U.S. dollar and higher oil prices amid escalating military tensions between the United States and Iran in the Gulf region.
Although geopolitical tensions typically increase demand for safe-haven assets such as gold, rising oil and energy prices have fueled inflationary pressures in the United States, prompting markets to reduce expectations for Federal Reserve interest rate cuts this year.
Hawkish comments from several Federal Reserve officials have further reinforced expectations that U.S. interest rates may remain elevated for longer, as investors await additional economic data related to growth and inflation, particularly the Personal Consumption Expenditures (PCE) Price Index, which is closely monitored by the Fed.
Market expectations indicate that U.S. PCE inflation may rise to 3.8% year-on-year, compared to the previous reading of 3.5%, which could support the continuation of tighter monetary policy and increase pressure on gold prices in the coming period
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