Gold prices saw a slight uptick in local markets on Saturday, following a weekend closure of the global exchange. This increase came after a week of losses, with the price of gold dropping around 1% globally, according to a report from the iSagha online platform. Saeed Embaby, CEO of iSagha, noted that the price of a gram of 21-karat gold rose by approximately EGP 10 during Saturday's trading, closing at EGP 3,770. This came after the global price of gold ended the week at $2,622 per ounce, reflecting a weekly decline. Gold prices in local markets saw further movement, with 24-karat gold reaching EGP 4,309, 18-karat gold at EGP 3,231, and 14-karat gold priced at EGP 2,514. The gold pound was priced at EGP 30,160. Embaby also reported that gold prices in local markets had gained roughly EGP 40 during Friday's trading. A gram of 21-karat gold opened at EGP 3,720 and closed at EGP 3,760, while global gold prices rose by $25, moving from $2,597 to $2,622 during the same period.
Global Factors Affecting Gold Prices The decline in global gold prices was largely attributed to the U.S. Federal Reserve's decision to reduce interest rates by 25 basis points in its final monetary policy meeting of 2024. Federal Reserve Chairman Jerome Powell's comments regarding a more moderate reduction in interest rates in 2025 prompted sharp sell-offs in the gold market, pushing the price of an ounce down to $2,580 at one point. The Federal Reserve's projections for the next year indicate two additional interest rate cuts, but at a slower pace, which has led to weaker gold demand in the short term. On Wednesday, the Federal Reserve lowered the federal funds rate to a range of 4.25%–4.50%. Embaby explained that gold prices steadied by the end of the week, following the release of the U.S. Personal Consumption Expenditures (PCE) inflation report, which showed weaker-than-expected inflation data. The PCE inflation increased by just 0.1% in November, underperforming expectations of a 0.2% rise. The annual PCE inflation rate accelerated slightly to 2.4%, up from 2.3% in October, but remained below market expectations of 2.5%. Core personal spending inflation also fell to 0.1% from 0.3% in October, keeping annual inflation at 2.8%, below the anticipated 2.9%.
Central Banks' Influence on Gold Demand According to the iSagha report, central banks, particularly in emerging markets, have been significant drivers of gold demand in early 2024. Embaby noted that these purchases are part of a broader strategy by central banks to diversify investments and reduce reliance on the U.S. dollar, in line with global de-dollarization trends. Additionally, consumer demand for gold, particularly from Asia, remains strong, buoyed by fears of rising inflation and ongoing geopolitical uncertainties. Embaby predicted that demand from central banks would continue to grow as countries look to hedge against economic instability. He also pointed out that weak global economic growth, rising inflation risks, and geopolitical instability are likely to maintain robust consumer demand for gold, especially in emerging markets. The outlook for 2024 suggests that while gold prices may face short-term volatility, long-term factors like central bank purchases, inflation concerns, and geopolitical factors will continue to support demand for the precious metal.
