Gold prices in Egypt’s local market pared their losses during midday trading on Wednesday, while global gold prices reversed earlier declines and moved higher following the release of weaker-than-expected U.S. Producer Price Index (PPI) data for June.
The price of 21-karat gold opened trading at around EGP 5,825 per gram, down EGP 55 from Tuesday’s closing level of EGP 5,880, before recovering most of its losses to trade at approximately EGP 5,870 by midday, supported by the rebound in international gold prices.
Despite the recovery, local prices remained EGP 10 below the previous day’s close, making it more accurate to describe the move as a narrowing of losses rather than a return to gains on a daily basis.
Spot gold initially declined from Tuesday’s closing level of US$4,057 per ounce to around US$4,029 at the start of Wednesday’s session before reversing course and climbing to approximately US$4,065 per ounce after the release of the U.S. producer inflation data, turning earlier losses into gains relative to the previous close.
Meanwhile, 24-karat gold traded at around EGP 6,709 per gram, 18-karat gold reached EGP 5,032 per gram, while the gold sovereign was priced at approximately EGP 46,960.
Local gold prices had risen by about EGP 65 during Tuesday’s session, with 21-karat gold opening at EGP 5,815, touching a high of EGP 5,920, and closing at EGP 5,880.
Globally, gold gained about US$55 per ounce on Tuesday after opening at US$4,002, reaching an intraday high of US$4,096, and settling at US$4,057, supported by softer-than-expected U.S. inflation data.
Wednesday’s Producer Price Index report provided another indication that inflationary pressures in the United States continue to ease, following Tuesday’s Consumer Price Index report, strengthening expectations that the Federal Reserve may adopt a less aggressive monetary policy stance.
According to the U.S. Bureau of Labor Statistics, the Producer Price Index for final demand declined by 0.3% month-on-month in June after rising 0.6% in May and 1.1% in April, while the annual increase stood at 5.5%.
The monthly decline was driven primarily by a 1.4% drop in final goods prices—the largest decrease since July 2022—reflecting a 6.4% decline in energy prices, including a 12% fall in gasoline prices. Meanwhile, services prices increased by 0.2%.
The core Producer Price Index, which excludes food, energy, and trade services, rose by just 0.1% in June following a 0.8% increase in May, while the annual core reading reached 5.1%, indicating that underlying inflation at the producer level remains elevated but has lost significant monthly momentum.
The PPI report followed Tuesday’s Consumer Price Index release, which showed consumer prices falling by 0.4% month-on-month in June after increasing 0.5% in May, while annual inflation slowed to 3.5% from 4.2%. Core inflation remained unchanged on a monthly basis and eased to 2.6% year-on-year, contributing to a weaker U.S. dollar, lower Treasury yields, and a surge of more than 2% in gold prices during Tuesday’s trading session.
The latest producer inflation data reinforced expectations that easing inflation could reduce pressure on the Federal Reserve to raise interest rates, weakening both the U.S. dollar and Treasury yields while increasing the appeal of non-yielding assets such as gold.
Investors have also scaled back expectations for a rate hike at the Federal Reserve’s July meeting, with future policy decisions becoming increasingly dependent on incoming economic data, particularly labor market indicators, consumer spending, and Personal Consumption Expenditures (PCE) inflation.
At the same time, Federal Reserve Chair Kevin Warsh maintained a cautious tone during his semiannual testimony before Congress, emphasizing that the Federal Open Market Committee remains committed to restoring price stability and will not tolerate persistently elevated inflation.
Warsh also noted that the Federal Reserve kept its benchmark interest rate unchanged at 3.50%–3.75% during its June meeting, citing continued economic growth, a resilient labor market, and inflation that remains above the central bank’s 2% target.
While the latest inflation reports have provided short-term support for gold, they are not sufficient on their own to determine the future direction of monetary policy. Policymakers will require additional evidence that inflation is moving sustainably toward target before making significant policy adjustments.
Higher oil prices and escalating geopolitical tensions in the Middle East could also reignite inflationary pressures in the coming months, particularly as much of June’s moderation in both consumer and producer inflation was driven by lower energy prices.
Reuters noted that rising oil prices could limit gold’s upside by fueling inflation concerns and encouraging the Federal Reserve to keep interest rates higher for longer.
The longer-term investment outlook remains supportive. According to the World Gold Council, Chinese gold ETFs recorded net outflows of approximately RMB 15 billion (US$2.2 billion) in June, reducing holdings by 17 tonnes to 277 tonnes—the largest monthly outflow on record.
Despite June’s weakness, Chinese gold ETFs attracted net inflows of around RMB 40 billion (US$5.6 billion) during the first half of the year, marking the second-strongest first-half inflow on record and increasing total holdings by 29 tonnes.
The World Gold Council attributed the strong first-half investment demand to continued geopolitical uncertainty, ongoing gold purchases by the People’s Bank of China, and increased participation by institutional investors, despite June’s correction and a partial shift toward equity markets.
Looking ahead, gold’s medium- and long-term outlook remains supported by continued central bank purchases, geopolitical uncertainty, and resilient investment demand. However, short-term price movements are expected to remain highly sensitive to U.S. economic data, Federal Reserve policy expectations, Treasury yields, the U.S. dollar, oil prices, and geopolitical developments.
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