Local Gold Prices Decline as Markets Await Fed Decision and Trade War Developments
Gold prices in the local market saw a significant decline during Tuesday's trading session, despite a slight global uptick in spot prices driven by renewed geopolitical and trade tensions. The local drop coincided with a decline in the U.S. dollar exchange rate, contributing to a 65 EGP per gram drop in gold prices since the beginning of the week.
Local gold prices fell by approximately 10 EGP compared to Monday's closing levels, with 21-karat gold now trading at 4,565 EGP per gram. Meanwhile, the global spot price rose by around $7 to reach $3,324 per ounce.
Additionally, 24-karat gold was quoted at 5,217 EGP, while 18-karat stood at 3,913 EGP. The 14-karat price reached 3,044 EGP, and the gold pound (eight grams of 21-karat) was priced at 36,520 EGP.
Gold had already dropped about 50 EGP on Monday, falling from 4,630 to 4,575 EGP per gram, while the global spot price declined by $20—from $3,337 to $3,317 per ounce.
Tariff Agreement Fails to Calm Markets
Although a preliminary tariff agreement was announced between the U.S. and the European Union—imposing a 15% tariff on most EU exports to the U.S.—markets didn't react with much optimism. While the agreement avoided further escalation in the trade war, it preserved the underlying dispute, raising doubts about global growth prospects and highlighting the potential for tariffs to become a long-term fixture rather than a temporary measure.
This rekindled demand for gold as a safe haven, especially amid stalled U.S.-China trade negotiations. Senior economic officials from both nations held a more than five-hour meeting in Stockholm on Monday to explore the possibility of extending their trade truce by another three months. With no clear outcome emerging, investor concerns have intensified, reviving risk-off sentiment across global markets.
Will the Fed Decision Support Gold?
Markets are now squarely focused on the U.S. Federal Reserve's monetary policy meeting, which began today and will continue for two days. While no change in interest rates is expected, investors are closely watching the final statement and commentary from Fed officials for any signals about the timing of future rate cuts.
Any dovish tone or inclination toward monetary easing could weigh on the U.S. dollar and support gold, particularly in the context of slowing growth and inflationary pressures stemming from tariffs. Conversely, continued dollar strength could apply further downward pressure on gold prices.
Could Gold Reach $4,000?
In a contrasting development, Fidelity International has projected that gold prices could reach $4,000 per ounce by the end of next year. This forecast is based on three key drivers: anticipated rate cuts by the Federal Reserve, a weakening U.S. dollar, and continued gold accumulation by central banks in response to rising geopolitical and inflationary risks.
Gold is currently in a complex position—caught between local pressures from a falling dollar and international anticipation surrounding the Fed meeting and trade war outcomes. While investors continue to use gold for hedging, the final word will be shaped by upcoming economic data and monetary policy decisions in the weeks ahead.
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