Gold prices increased in global trading on Tuesday, bolstered by uncertainty surrounding the political plans of US President-elect Donald Trump. Markets are awaiting US inflation data, expected to offer more clarity on the Federal Reserve's future monetary policy. The global price of gold rose by 0.2%, reaching $2,675 per ounce after opening at $2,664. It is currently trading at $2,669 per ounce, according to Gold Bullion analysis. This rise follows a 1% decline yesterday, which brought gold back to $2,656 per ounce. However, the potential for further gains remains high, especially if the price surpasses the $2,690 per ounce mark. Gold is currently receiving support mainly from concerns regarding US President Donald Trump's upcoming policies. Reports suggest his team is preparing a plan to gradually impose trade tariffs over the coming months, although it remains unclear whether he will implement these measures once his second term begins on January 20. The proposed tariff increases, ranging from 2% to 5% each month, aim to avoid sudden inflation spikes due to tariffs. Trump has pledged to impose heavy tariffs on imports from day one of his presidency, with the 60% tariffs he promised on China being the main concern for markets. These tariff fears have driven demand for gold as a safe-haven asset, though concerns that tariffs could raise inflation, keeping interest rates elevated for longer, have somewhat offset this demand. This week, attention is focused on US inflation data. The Producer Price Index (PPI) will be released later today, followed by the Consumer Price Index (CPI) on Wednesday, offering further insight into the economy and the Federal Reserve's policy direction for 2025. Several Federal Reserve officials are also scheduled to speak this week. Stable inflation and a strong labor market are expected to provide the Federal Reserve with more room to maintain high interest rates, which is a negative trend for non-yielding assets such as gold. The expectation of slower interest rate cuts has driven the US dollar to its highest level in over two years against a basket of major currencies, increasing pressure on gold prices. If inflation numbers come in weaker than expected, the US dollar could face selling pressure, which may boost gold as its purchasing cost declines. The World Gold Council reported a rise in cash inflows into gold investment funds, with an increase of 6 tonnes during the week ending 10 January. This was primarily driven by a 7-ton increase in North American investment funds, following a decline of -3.2 tonnes in the previous week. Meanwhile, in Egypt, the price of gold rose in Tuesday's trading, following a decline the previous day. This movement mirrors global gold price trends, alongside a decrease in the dollar exchange rate against the pound, which reduces the likelihood of further increases in gold prices. The price of 21k gold, the most common in Egypt, opened today's trading at EGP 3,765 per gram, trading at EGP 3,760 per gram at the time of Gold Bullion's technical report. On Sunday, it had dropped by EGP 40, closing at EGP 3,750 per gram after opening at EGP 3,790 per gram. The rise in global gold prices today helped local gold recover some of its losses from yesterday, attempting to establish a price base above EGP 3,750 per gram, halting the previous decline. Meanwhile, the continued decrease in the dollar exchange rate against the pound in official banks is limiting support for local gold prices, which are influenced by the dollar exchange rate. Despite the current stability of local gold prices, market caution persists due to conflicting predictions about the future of the exchange rate amid challenges facing the Egyptian economy. Additionally, the gold market has not benefitted from the transfer of liquidity from maturing bank certificates since early January, as most liquidity has been reinvested in new certificates. As a result, gold prices remain largely influenced by global market movements.
