Strong Dollar Pressures Gold Prices

Gold prices declined in both local markets and global exchanges during Thursday’s trading session, weighed down by the strength of the U.S. dollar, which climbed to its highest level in two weeks, according to a report issued by the iSagha platform.

Saeed Embabi, CEO of iSagha, said that domestic gold prices fell by around EGP 100 during today’s trading. The price of 21-karat gold dropped to about EGP 6,580 per gram, while global gold prices declined by roughly $73, with the ounce trading near $4,854.

Embabi added that 24-karat gold was priced at around EGP 7,520 per gram, 18-karat gold at about EGP 5,640, while the gold pound reached approximately EGP 52,640.

The report noted that gold is struggling to build on its strong rebound from levels below $4,800 per ounce, as the U.S. dollar recovered from a four-year low and rose to a two-week high, a move that typically acts as a headwind for gold prices.

At the same time, the agreement between Iran and the United States to hold talks in Oman helped ease fears of a military confrontation. This development, along with a decline in China’s gold consumption in 2025, has limited gold’s upside potential.

Despite this, investors remain hesitant to place aggressive bullish bets on the U.S. dollar, amid growing expectations of U.S. interest rate cuts. These expectations were reinforced by weak labor market data, as the ADP report released on Wednesday showed that the U.S. private sector added only 22,000 jobs in January, down from a downwardly revised 37,000 in the previous month and below market expectations.

These factors helped gold recover more than $100 from its intraday lows. Meanwhile, ongoing geopolitical risks continue to cap downside pressure on gold, supporting its role as a safe haven. The report suggested that caution remains warranted before establishing new short positions, pending confirmation of a prolonged corrective move from record highs.

According to data released by the China Gold Association, gold consumption in China fell by 3.57% in 2025 to 950.096 metric tons, while gold output from domestic raw materials increased by 1.09% year-on-year to 381.339 metric tons.

On the U.S. monetary policy front, the nomination of Kevin Warsh by President Donald Trump to head the Federal Reserve sparked speculation that the central bank could adopt a less accommodative stance, lending support to the U.S. dollar. However, Trump later stated that he would not have approved the nomination if Warsh favored raising interest rates, expressing confidence that the Federal Reserve will move toward cutting rates.

Traders continue to price in the likelihood of two additional interest rate cuts by the Federal Reserve this year, particularly after the disappointing private-sector employment data, despite the Institute for Supply Management’s (ISM) services PMI holding steady at 53.8 points in January, signaling continued expansion in the sector and providing modest support to the dollar.

Meanwhile, disagreements persist between Iran and the United States over the scope of negotiations, which could further underpin gold as a safe-haven asset should tensions escalate.

In a recent note, analysts at UBS described gold as an attractive hedging instrument, emphasizing that the bull market is not over yet. They forecast prices to rise to $6,200 per ounce by mid-2026, representing an increase of nearly 25% from current levels.

Investors are now awaiting key U.S. economic data later on Thursday, including the delayed Job Openings and Labor Turnover Survey (JOLTS) and weekly initial jobless claims, along with any new comments from Federal Reserve officials, all of which could influence gold’s direction.

On the global monetary policy front, the Bank of England kept its interest rate unchanged at 3.75% at today’s meeting, in line with market expectations. However, the vote revealed divisions within the Monetary Policy Committee, with four members supporting a 25-basis-point rate cut.