Stronger US Dollar Pressures Gold; Local Prices Fall by EGP 55 at the Start of the Week

Marsad Al Dahab reported that gold prices declined in both the local market and the global bullion market during Monday’s trading, pressured by a stronger US dollar amid renewed geopolitical tensions surrounding the Strait of Hormuz. However, easing expectations for further US Federal Reserve interest rate hikes, along with continued central bank gold purchases, helped limit the precious metal’s losses.

Local gold prices fell by EGP 55 compared with last week’s closing level, with 21-karat gold trading at EGP 5,830 per gram, while spot gold declined by $37 to $4,139 per ounce.

The price of 24-karat gold reached EGP 6,663 per gram, while 18-karat gold traded at EGP 4,997 per gram. The gold sovereign was priced at EGP 46,640.

Local gold prices had risen by EGP 105 during the previous week. Twenty-one-karat gold opened trading at EGP 5,780 per gram, declined to EGP 5,630, then climbed to EGP 5,920 before ending the week at EGP 5,885.

Meanwhile, gold gained $88 per ounce on the international market last week after opening at $4,088, falling to $3,973, rallying to $4,185, and closing at $4,176 per ounce.

According to Marsad Al Dahab, the latest decline in gold prices was driven by renewed strength in the US dollar at the start of the week, supported by persistent geopolitical tensions around the Strait of Hormuz. Iran’s announcement that it intends to impose new transit fees on vessels passing through the strategic waterway boosted demand for the US currency as a safe-haven asset, weighing on bullion prices.

Despite the pullback, gold’s losses remained limited as investors continued to reduce expectations for additional Federal Reserve rate hikes following weaker-than-expected US labor market data, reinforcing expectations that the central bank could adopt a more cautious monetary policy stance in the coming months.

Marsad Al Dahab added that continued central bank gold purchases remain one of the strongest pillars supporting prices over the medium and long term, as monetary authorities continue to diversify their reserve assets away from the US dollar amid persistent geopolitical and economic uncertainty.

The Observatory also noted that the World Gold Council's latest Mid-Year Outlook indicated that, despite gold's decline from this year's highs, the metal continues to be supported by solid underlying fundamentals. The report expects prices to trade within a relatively narrow range during the second half of the year, while renewed geopolitical tensions or softer US monetary policy could pave the way for another upward move.

Markets are now awaiting the release of the US ISM Services PMI, along with speeches from several Federal Reserve officials later today, for fresh clues on the outlook for US monetary policy. From a technical perspective, any additional pullback is likely to attract buying interest as long as gold remains above key support levels.