Gold prices have soared to a new historic high, marking a significant milestone as the precious metal increased for the fifth consecutive week. The surge comes amidst rising global tensions and uncertainty in the financial markets, driven in part by US President Donald Trump's recent tariff threats. This latest price surge represents the largest gain in gold prices since March of the previous year. Last week, gold prices climbed 1%, hitting a historic high of $2,817 per ounce before closing at $2,797 per ounce. This strong week-end result capped a 6.6% increase in January, marking the first monthly rise for gold after two months of losses. According to Gold Bullion's analysis, this solid start to the year highlights gold's continued appeal as a safe-haven asset amid ongoing market instability. Geopolitical tensions have played a crucial role in gold's rise. President Trump has threatened to impose a 25% tariff on imports from Canada and Mexico, while also considering new tariffs on Chinese goods. This uncertainty has left markets in a state of cautious anticipation, contributing to gold's appeal as an investment safe haven. The mixed signals from the US Federal Reserve and Trump's administration have added to the sense of market unpredictability. While President Trump has called for lower interest rates to stimulate economic growth, the Federal Reserve has opted to keep rates steady. During its first monetary policy meeting of 2025, the Federal Reserve confirmed that it would not rush to lower rates, which diverges from Trump's desire for a reduction in borrowing costs. This policy divergence could keep interest rates elevated, which traditionally puts downward pressure on gold prices. However, with higher rates potentially strengthening the dollar, gold may continue to be supported as a hedge against market volatility and rising inflation, especially if trade tensions escalate further. The World Gold Council reported a notable decline in gold-backed investment funds during the week ending January 24, with a decrease of 7.7 tonnes—the largest drop since mid-November. While North American funds saw substantial outflows (-20.9 tonnes), European funds experienced inflows (+12.1 tonnes), suggesting regional variations in investor sentiment. In Egypt, the price of gold saw modest fluctuations but remained largely stable, mirroring the performance of global gold prices. The local price of 21K gold opened at EGP 3,900 per gram on Saturday and remained steady at EGP 3,898 per gram, a slight decrease from Friday. Over the past week, the price of local gold increased by 1.6%, rising by EGP 60, with strong global price support and a stable dollar-to-pound exchange rate. The increase in local gold prices comes as many Egyptians are opting to sell gold for cash to capitalize on the rising prices, leading to more gold supply in the market. Despite this, the market has faced challenges with liquidity from maturing bank certificates, as many investors are choosing these safer options for regular returns instead of the volatile gold market. However, overall market stability is being bolstered by the steady dollar exchange rate. The local price of 21K gold saw a peak last week of EGP 3,935 per gram before closing at EGP 3,900 per gram, surpassing the previous week's high of EGP 3,880 per gram. With the possibility of profit-taking sales, a slight correction in gold prices may occur in the coming days. In the broader context, Egypt's recent $2bn sovereign debt sale has further supported investor confidence, with foreign investors remaining optimistic about the country's economic stability.
