Gold Falls Locally Despite Global Ounce Gains on Dollar Weakness and Fed Rate Cut Expectations

See - Sada Elbalad

a day ago

Waleed Farouk
Local gold markets saw a decline in prices during Wednesday's trading, despite gains in global ounce prices, supported by a weaker U.S. dollar after the latest U.S. inflation data reinforced expectations that the Federal Reserve will cut interest rates at its upcoming mid-September meeting, according to the 'iSagha' platform.
Local gold prices fell by about EGP 5 compared to yesterday's close, with 21-karat gold recording EGP 4,570 per gram, while the ounce gained about $7 to reach $3,355. The price of 24-karat gold reached EGP 5,223, 18-karat stood at EGP 3,917, and 14-karat at EGP 3,047, while the gold pound was priced at EGP 36,560.
On Tuesday, gold had also dropped by about EGP 5, with 21-karat starting the session at EGP 4,580 and closing at EGP 4,575. In the global market, the ounce declined by about $3, opening at $3,351 and closing at $3,348.
Today's gold movements were volatile, driven by U.S. inflation data and developments related to tariffs, as the metal fell to new lows before briefly rebounding near $3,355 per ounce. The local market's decline was also linked to the drop in the U.S. dollar against the Egyptian pound, with the Central Bank's latest rates at EGP 48.37 for buying and EGP 48.50 for selling.
U.S. Inflation Data and Impact on Gold
The July Consumer Price Index (CPI) showed headline inflation rising by 0.2% month-on-month and 2.7% year-on-year, while core inflation (excluding food and energy) increased by 0.3% month-on-month and 3.1% year-on-year. Energy prices fell by 1.1%, food prices were unchanged, and the impact of tariffs so far has been limited. The figures indicate that U.S. companies are still absorbing much of the additional costs, preventing them from being passed directly to consumers.
Combined with signs of a slowing labor market, these data boosted the probability of a 25-basis-point rate cut in September to over 95%, according to the CME FedWatch tool, supporting gold prices by pressuring the U.S. dollar.
Geopolitical and Trade Landscape
Optimism over a 90-day extension of the U.S.-China tariff truce and anticipation of U.S.-Russia peace talks in Alaska on Friday have limited gold's upward momentum as safe-haven demand eased.
Tariff Developments on Gold
U.S. President Donald Trump confirmed on Monday that no tariffs will be imposed on gold bullion, ending a wave of concern that rattled markets last week, particularly over potential duties on 1-kg bars that would have impacted Switzerland, one of the largest gold exporters.
The Swiss Precious Metals Producers Association welcomed the decision but called for an official decree to ensure stability, while the White House confirmed that an executive order is being prepared to address misinformation about gold tariffs.
Investment Trends in Asia
A Bloomberg report noted that wealthy Asian investors have more than doubled their gold holdings over the past year, especially in Hong Kong. Some lend bullion to local jewelers or enter profit-sharing partnerships, while others exploit price differentials between markets.
Future Outlook
Despite potential catalysts, gold has failed to break above $3,400, keeping it under selling pressure that could drive it to test lower support levels, especially as recent rally peaks have been lower than their predecessors.
U.S. Political and Monetary Policy
Trump intensified his criticism of Federal Reserve Chair Jerome Powell, hinting at allowing a lawsuit against him over what he described as poor management of Fed building projects—adding a new political dimension to market risks.
Separately, Treasury Secretary Scott Bessent urged the Fed to cut rates by 50 basis points, citing weak jobs data and slowing inflation.
Trump also nominated economist E.J. Antoni to lead the Bureau of Labor Statistics after dismissing Erica MacEntarfer, amid controversy over data collection methods. Meanwhile, the Fed continues to balance its dual mandate of price stability and maximum employment against a backdrop of a clearly slowing labor market.
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