US Government Shutdown Boosts Gold Gains Amid Fed Rate Cut Expectations

Gold prices remained stable in the local market during Saturday's trading, coinciding with the global stock exchange's weekend break. This stability follows a strong weekly gain of 3.4% for the ounce, supported by the ongoing US government shutdown and increasing market bets on the Federal Reserve cutting interest rates, according to a report issued by the "iSagha" platform, which specializes in gold and jewelry trading.

Local and Global Price Movements

Saeed Imbabi, Executive Director of the "iSagha" platform, stated that local gold prices showed stability during today's trading compared to the close of yesterday's transactions. The price of an 21-karat gold gram recorded EGP 5,230, while the global ounce rose by $126 over the past week to record $3,886.

24-karat recorded approximately EGP 5,977.

18-karat was around EGP 4,483.

14-karat was about EGP 3,487.

The price of the Gold Pound remained stable at EGP 41,840.

The report clarified that gold rose by EGP 20 yesterday (Friday), after the 21-karat opened trading at EGP 5,210 and closed at EGP 5,230. Globally, the ounce also climbed from $3,856 to $3,886.

Best Monthly Performance in 16 Years

Gold recorded an exceptional performance in September, rising locally by 11% (equivalent to EGP 490) and globally by 12% (equivalent to $411 per ounce), to end the month at record levels, the highest in 16 years.

This performance is attributed to the escalating demand for safe havens amidst global political and economic turmoil, in addition to strong bets on the US Federal Reserve cutting interest rates in the upcoming meetings.

Supporting Environment and Continued Risks

Global gold prices rose, supported by increasing demand for safe-haven assets, with the continued US government shutdown halting the release of important economic data, such as jobless claims and the non-farm payroll report. This has increased market uncertainty and prompted traders to await statements from Federal Reserve officials.

Stephen Miran, a Federal Reserve Governor, affirmed that access to economic data is essential for determining monetary policy, expressing optimism that the central bank will be able to collect data soon, but stressed the necessity of adopting a forward-looking policy under current conditions.

In contrast, Austan Goolsbee, President of the Federal Reserve Bank of Chicago, noted that markets are already pricing in a rate cut, but monetary policy must remain linked to data, not expectations.

In Washington, the US Senate is expected to vote again on funding bills, amid a complete lack of any sign of bipartisan agreement.

Mixed Economic Data

US Treasury yields declined, with the 10-year bond yield dropping to 4.11%, while real yields – which move inversely to gold – rose to 1.77%.

The ISM Services Purchasing Managers' Index (PMI) also fell from 52.0 to 50, missing expectations of 51.7, reflecting a slowdown in economic activity and lower growth expectations.

ADP data showed that private companies laid off 32,000 employees in September, compared to expectations of an increase in employment, while the Job Openings and Labor Turnover Survey (JOLTS) showed steady demand at 7.23 million jobs.

According to the Prime Market Terminal tool, the probability of the US cutting the interest rate by 25 basis points at the October 29 meeting is approximately 96%.

Central Bank Purchases Support the Upward Trend

The World Gold Council indicated that central banks worldwide resumed their gold purchases in August, totaling 15 tons, after a temporary halt in July. The purchases were led by Kazakhstan (8 tons) and supported by Turkey, China, Bulgaria, Ghana, the Czech Republic, and Uzbekistan, while sales were limited to Russia and Indonesia.

Poland is seeking to raise the gold share of its reserves from 20% to 30%, having added 67 tons since the start of 2025, topping the list of global buyers.

Furthermore, China's reserves rose to 2,300 tons, representing 7% of its international reserves, while Turkey's reserves reached 639 tons.

The report affirms that the continuation of global economic pressures is driving central banks and investors to boost their gold holdings as a safe haven and a hedge against market volatility.