Economic Factors Weigh on Global Gold Prices as Markets Await Fed Policy Shift
Waleed Farouk
Gold prices in Egypt saw a slight increase on Saturday, coinciding with the weekly closure of global markets, following a notable decline of 1.8% in the international ounce price by the end of trading on Friday. This came despite renewed tensions and intensified military confrontations in the Middle East.
Locally, gold prices rose by EGP 15 compared to Friday's closing, with 21-karat gold reaching EGP 4800 per gram. Meanwhile, the global ounce price fell by $61 over the week to settle at $3369.
The 24-karat gold recorded EGP 5489 per gram, 18-karat stood at EGP 4114, The gold pound (8 grams of 21K) was priced at EGP 38400.
This marks the first weekly decline in gold prices in nearly three weeks. Interestingly, the metal failed to capitalize on the geopolitical escalation in the region, instead recording a noticeable drop in international markets.
Several economic and investment-related factors have curbed gold's upward momentum, limiting the impact of political events. Chief among these are the strong U.S. dollar and weak demand from China, both at the level of the central bank and retail consumers.
According to official data, the People's Bank of China purchased only 1.9 metric tons of gold in May 2025, compared to 2.3 tons in both March and April, and a peak of 10 tons in December 2024.
Although gold still constitutes approximately 7% of China's official reserves, this ratio has not seen significant growth—raising questions about Beijing's future monetary stance toward the yellow metal.
Gold also faced selling pressure in Asian markets, particularly in India, where investors engaged in profit-taking after a rapid price rally. This increased supply and contributed to price declines.
Despite a moderate slowdown in U.S. inflation indicators, the Federal Reserve has remained committed to keeping interest rates unchanged. This policy stance enhances the appeal of fixed-income instruments like bonds, while diminishing gold's allure—since gold offers no yield and becomes more attractive only when interest rates are low.
In a surprising shift, Federal Reserve Governor Christopher Waller stated that a rate cut could begin as early as the July 2025 meeting, if the current moderate trajectory of economic data continues.
Waller, known for his traditionally hawkish views, appeared more flexible this time, acknowledging room for interest rate cuts, while maintaining readiness to reverse course if economic shocks occur. This nuanced tone signals a possible pivot in Fed policy.
He also downplayed the inflationary impact of tariffs, noting that a proposed 10% tariff on all imports would not have a significant effect on overall prices—reducing the likelihood that such tariffs will be used to justify further monetary tightening.
If realized, a U.S. rate cut may open the door for renewed investment flows into Egypt, contingent on relative currency stability and a decline in Egypt's sovereign credit default swap (CDS) rates.
Waller's remarks represent the first serious signal toward the end of the current tightening cycle, though any rate reduction remains highly dependent on future economic data.
Looking ahead, markets await a raft of key U.S. economic indicators, including:
S&P Global flash PMI on Monday,
U.S. consumer confidence report and Fed Chair Jerome Powell's testimony before the House Financial Services Committee on Tuesday,
New home sales data and Powell's testimony before the Senate Banking Committee on Wednesday,
Weekly jobless claims, durable goods orders, final Q1 GDP, and pending home sales on Thursday,
Core PCE inflation data on Friday.
These figures are likely to shape both Fed policy and investor sentiment in the coming weeks.
read more
CBE: Deposits in Local Currency Hit EGP 5.25 Trillion
Morocco Plans to Spend $1 Billion to Mitigate Drought Effect
Gov't Approves Final Version of State Ownership Policy Document
Egypt's Economy Expected to Grow 5% by the end of 2022/23- Minister
Qatar Agrees to Supply Germany with LNG for 15 Years
Business
Oil Prices Descend amid Anticipation of Additional US Strategic Petroleum Reserves
Business
Suez Canal Records $704 Million, Historically Highest Monthly Revenue
Business
Egypt's Stock Exchange Earns EGP 4.9 Billion on Tuesday
Business
Wheat delivery season commences on April 15
News
China Launches Largest Ever Aircraft Carrier
Sports
Former Al Zamalek Player Ibrahim Shika Passes away after Long Battle with Cancer
Lifestyle
Get to Know 2025 Eid Al Adha Prayer Times in Egypt
Business
Fear & Greed Index Plummets to Lowest Level Ever Recorded amid Global Trade War
Arts & Culture
Zahi Hawass: Claims of Columns Beneath the Pyramid of Khafre Are Lies
News
Flights suspended at Port Sudan Airport after Drone Attacks
Videos & Features
Video: Trending Lifestyle TikToker Valeria Márquez Shot Dead during Live Stream
News
Shell Unveils Cost-Cutting, LNG Growth Plan
Technology
50-Year Soviet Spacecraft 'Kosmos 482' Crashes into Indian Ocean
News
3 Killed in Shooting Attack in Thailand
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily News Egypt
3 hours ago
- Daily News Egypt
Gold falls 1.9% in one week despite ongoing Middle East conflict: Gold Bullion
Global gold prices declined over the past week, shedding 1.9% despite briefly hitting a two-month high. The drop is attributed to easing investor anxiety following US President Donald Trump's decision to delay action on potential military intervention in the escalating Iran-Israel conflict. According to Gold Bullion, gold opened the week at $3,440 per ounce and closed at $3,368, having briefly peaked at $3,451—the highest level in nearly two months—before falling to a weekly low of $3,340. The price decline came amid growing risk appetite among investors, spurred by Thursday's White House announcement that President Trump would postpone any decision on US military involvement for at least two weeks. The move is widely viewed as a diplomatic strategy to pressure Tehran back to the negotiating table. Markets reacted swiftly, with investor fears of an imminent US strike receding despite continued escalation between Iran and Israel throughout the week. Many traders, however, remained cautious, refraining from making aggressive long- or short-term bets on gold amid continued regional instability. Adding to the downward pressure on gold, the US Federal Reserve left interest rates unchanged at 4.50% this week, in line with market expectations. Fed Chair Jerome Powell indicated that the full impact of recent tariff measures may take time to reflect in economic data but reaffirmed that current conditions remain consistent with the central bank's policy stance. The Fed also revised its economic outlook, forecasting a slower GDP growth rate of 1.4% for the year, down from 1.7%, while raising its inflation projection to 3% from 2.7%—a signal of mild stagflation. Despite maintaining their projection for a 50 basis point rate cut in 2025, policymakers scaled back expectations for further cuts in the following two years by just 25 basis points. These revisions, along with the prospect of sustained inflation and a more measured pace of rate cuts, strengthened the U.S. dollar, which has historically had an inverse relationship with gold. A stronger dollar typically exerts downward pressure on gold prices, as gold becomes more expensive for holders of other currencies. Meanwhile, a new report by the World Gold Council highlighted a strategic shift by central banks toward gold. Based on a survey of 73 central banks, 76% indicated plans to increase their gold holdings over the next five years, up from 69% last year. At the same time, 75% of respondents anticipated a decrease in the proportion of dollar-denominated assets in their reserves, compared to 62% in the previous year. The Council attributed this trend to gold's historical resilience in times of crisis, its diversification benefits, and its effectiveness as a hedge against inflation—factors that are increasingly relevant given today's volatile geopolitical and economic climate.
Daily News Egypt
4 hours ago
- Daily News Egypt
United Bank rises to 7th among Egypt's mortgage lenders with EGP 3.2bn portfolio
Ashraf El-Kady, Chairperson of United Bank, announced that the bank's mortgage finance portfolio for low- and middle-income housing surpassed EGP 3bn in May 2025. With total financing reaching EGP 3.225bn, United Bank has become the seventh largest provider of mortgage finance in this segment, according to the Social Housing and Mortgage Finance Fund. El-Kady noted that more than 16,500 clients have benefited from financing for social and middle-income housing units nationwide. He highlighted the bank's role in supporting government and Central Bank efforts to promote social justice and eliminate informal housing areas by expanding access to subsidised mortgage finance. 'Mortgage finance plays a vital role in stimulating the economy, particularly through the provision of affordable housing to low- and middle-income citizens,' El-Kady said. United Bank currently provides mortgage finance services in 28 governorates, with a special focus on Upper Egypt, as well as active operations across the Canal cities and Delta region. The bank also extends mortgage financing to luxury housing projects. El-Kady underscored the bank's commitment to digital transformation, pointing to 24/7 digital services that enhance processing efficiency and improve customer experience. Clients can make installment payments via 225 ATMs spread across the country, or through the bank's 68-branch network. Salary transfers and interbank transfers can also be arranged digitally, without the need to visit a branch. He concluded by highlighting that United Bank's nationwide infrastructure—including services in areas without physical branches—has been essential in extending mortgage finance accessibility and supporting inclusive housing development.
Daily News Egypt
4 hours ago
- Daily News Egypt
MSMEDA injects EGP 17.4bn into 900k women-led enterprises over past decade: CEO
Bassel Rahmy, CEO of the Micro, Small, and Medium Enterprise Development Agency (MSMEDA), announced that the agency has allocated EGP 17.4bn over the past 10 years to support women-led micro and small enterprises across Egypt. This funding has empowered around 900,000 projects and contributed to the creation of approximately 1.2 million job opportunities. Rahmy highlighted that 54% of the total funding—equivalent to EGP 9.4 billion—was channelled into projects located in Upper Egypt, border governorates, and other underserved areas most in need of development. He emphasised the agency's determination to double this financing in the coming period, in line with government efforts to enhance women's economic participation and unlock their potential as drivers of national growth. The announcement was made during the 'Women in SMEs' Conference, organised by the Women Entrepreneurs Club under the patronage of MSMEDA. The event gathered representatives from leading financial institutions, entrepreneurship support organisations, ambassadors, and distinguished female leaders from across various economic sectors. In his remarks, Rahmy reiterated MSMEDA's commitment to working in close coordination with government bodies, civil society organisations, and development partners to further empower women economically. He stressed the importance of supporting women not only in launching new enterprises, but also in expanding and developing existing ones across industrial and service-based sectors. This approach, he noted, aims to cultivate a new generation of pioneering women entrepreneurs who can contribute meaningfully to Egypt's economic transformation. Rahmy also underlined the significance of the agency's participation in such conferences, as they serve as platforms to exchange expertise, share successful models, and align with international best practices—particularly in relation to the SME sector and women's empowerment. These efforts, he said, are central to Egypt's development agenda and are fully aligned with Egypt Vision 2030 and the United Nations Sustainable Development Goals. During the event, Rahmy presented the full range of services MSMEDA offers to support entrepreneurs, including both financial and non-financial assistance. He noted the agency's ongoing efforts to expand the accessibility of its services across the country, especially for women and young people, by leveraging digital transformation tools and platforms. Mona Mourad, Founder and CEO of the Women Entrepreneurs Club, affirmed the Club's commitment to enhancing the capabilities of Egyptian women and enabling them to take the lead in medium and large-scale enterprises. She pointed to the conference's collaboration with the American University in Cairo's Centre for Entrepreneurship and Innovation and Alcatel-Lucent as a prime example of how public-private-academic partnerships can accelerate women's leadership in digital transformation and institutional growth. Mourad commended MSMEDA for its pivotal role in building the capacities of women across various economic activities, particularly by supporting productive, sustainable projects. She added that the agency's presence at the event reflects the growing synergy between state institutions and development actors, both local and international, in creating a thriving ecosystem for female entrepreneurship. In recognition of their success, Rahmy honoured several women who have built notable businesses with MSMEDA's support. Among them was Yasmin El-Sweifi, who owns a thriving restaurant chain in Cairo; Mona Sami, who founded a business producing educational and interactive toys; and Sherine Saleh, who established a manufacturing project for medical and cosmetic supplies. Their achievements, Rahmy said, are a testament to the transformative impact of targeted support and inclusive development policies.
