Sharp Drop in Gold Prices; 21K Loses EGP 200 Amid Persistent Local Premium

Gold prices witnessed a sharp decline in both local and global markets during Thursday’s trading session, as growing uncertainty surrounding geopolitical tensions in the Middle East—alongside rising energy prices—continues to fuel inflationary pressures and strengthen expectations of prolonged tight monetary policy.

Saeed Embabi, CEO of the iSagha platform, said that gold prices in the local market dropped by approximately EGP 200, with 21-karat gold falling to EGP 7,000 per gram. Meanwhile, global gold prices declined by about $252, bringing the ounce to $4,568.

He added that 24-karat gold recorded around EGP 8,000 per gram, while 18-karat gold reached approximately EGP 6,000. The gold pound (8 grams of 21K) stood at about EGP 56,000.

Embabi noted that local gold prices are still trading at a premium of nearly EGP 300 above international prices, based on the official exchange rate of EGP 52.39 per US dollar set by the Central Bank of Egypt.

Globally, gold extended its losses, hitting its lowest level in more than a month, as shifting macroeconomic dynamics—particularly interest rate expectations—have outweighed its traditional appeal as a safe-haven asset, despite escalating geopolitical tensions tied to the US-Israeli-Iranian conflict.

Gold has been under sustained pressure since tensions in the Middle East intensified, as rising oil prices have reignited inflation concerns, reinforcing expectations that interest rates will remain elevated for a longer period, thereby reducing the attractiveness of non-yielding assets like gold.

This trend was further supported by the Federal Reserve’s hawkish stance following its decision to keep interest rates unchanged within the 3.50%–3.75% range, while maintaining a data-dependent approach and warning of persistent inflation risks.

The Fed’s updated projections indicate only one rate cut in 2026, alongside upward revisions to inflation forecasts, with the Personal Consumption Expenditures (PCE) index expected to reach 2.7% by December 2026, up from the previous estimate of 2.4%.

Federal Reserve Chair Jerome Powell emphasized that inflationary pressures remain largely driven by higher commodity and energy prices, noting that the central bank will not move toward easing monetary policy until there is clear progress in controlling inflation.

At the same time, geopolitical developments have increased market volatility, particularly following attacks on energy infrastructure in the Gulf region, which pushed oil and gas prices higher. This has supported the US dollar and lifted Treasury yields, adding further pressure on gold.

These dynamics have also led markets to scale back expectations for rate cuts, with traders no longer pricing in a full 25-basis-point reduction by the end of the year.

The decline extended to global mining stocks, which recorded sharp losses alongside falling gold and silver prices, amid a broader risk-off sentiment across global financial markets.

Although geopolitical tensions typically support demand for safe-haven assets, their current impact is being transmitted through inflation and energy channels, strengthening the US dollar and weighing on gold.

Gold fell by more than 4% during Thursday’s session, while silver dropped over 8%, pressured by stronger-than-expected US producer price data, which reinforced expectations of continued monetary tightening.

Amid these developments, markets remain focused on the trajectory of the Middle East conflict and its implications for energy prices, as well as upcoming decisions by major central banks, which are expected to play a decisive role in shaping gold’s direction in the coming period.