The Gold and Precious Metals Division of the Federation of Egyptian Industries (FEI), headed by Ehab Wassef, has released its latest report on local and global gold market developments. The division confirmed a noticeable decline in domestic gold prices over the past week, triggered by a sharp drop in global gold prices alongside the stability of the US Dollar against the Egyptian Pound.
The report noted that 21-karat gold—the most heavily traded caliber in the Egyptian market—dropped by 4.8% over the past week. It hit a low of LE 6,450 per gram after opening the weekly session at 6,775 EGP per gram, before finally closing the week at the LE 6,450 mark.
Domestic market stability and forex inflows
The division highlighted that the substantial drop in the global price of gold ounces was the primary catalyst behind the domestic price decline. This was further supported by the US Dollar stabilizing near the LE 52 mark, which mitigated any additional pricing pressures on the local market.
Furthermore, improved foreign exchange indicators in Egypt helped bolster the stability of the exchange market. This follows the Central Bank of Egypt’s (CBE) announcement of a $1.56 billion increase in net foreign assets during April, reaching $22.89 billion. Additionally, remittances from Egyptians working abroad surged by 61.8 percent year-on-year in March, reaching $5.5 billion.
The division emphasized that increased foreign currency inflows from various sources have positively impacted the markets, cooling down local gold pricing and reducing speculative volatility and sudden price spikes.
Impact of US employment data on global markets
On the global front, the report indicated that recent US employment data put significant downward pressure on gold prices. The data reinforced market expectations that the US Federal Reserve will maintain its hawkish monetary policy, lowering the probability of near-term interest rate cuts.
The division added that US wage growth holding at 3.4 percent reignited inflation fears. The Federal Reserve views wage inflation as one of the most dangerous and difficult forms of inflation to control, which subsequently pushed US bond yields higher and negatively impacted gold prices.
According to the report, the Federal Reserve now finds itself cornered between three difficult options:
Raising interest rates to combat inflation.
Pausing interest rates while inflationary pressures persist.
Cutting interest rates, which could weaken the US Dollar and cause inflation to surge again.
However, the report emphasized that all three scenarios ultimately support gold in the long term as a primary hedge.
Technical Breakdown and Physical Demand
Strong selling momentum drove global gold prices to break below the 200-day Exponential Moving Average (EMA) near $4,380 per ounce, coinciding with a breach of the medium-term upward trendline, which intensified last week’s losses.
Locally, 21-karat gold extended its losses to break below the 6,500 EGP per gram threshold, settling near a temporary support level of LE 6,450 per gram.
Despite these recent declines, the Gold and Precious Metals Division revealed that physical demand for gold remains robust. Data from the Chicago Mercantile Exchange (CME) showed a simultaneous decrease in both registered and eligible gold quantities within vaults. This indicates actual physical metal leaving the exchange rather than mere internal transfers, reflecting sustained real demand for physical gold.
The division added that during the latest downturn, the markets witnessed massive liquidations by speculators and hedge funds, resulting in billions of dollars in losses. Concurrently, some institutions moved to purchase physical gold at these lower levels—a behavior that often signals that the market is nearing a price floor.
The report concluded that the $4,200 to $4,050 per ounce range represents major support levels for global gold in the current phase. Meanwhile, long-term targets of $5,000, $5,500, and eventually $6,000 per ounce remain intact amidst ongoing geopolitical tensions and global inflationary pressures.