Egypt's gold market witnessed a sharp decline in prices on Monday, with a 140 EGP drop, following a significant decrease in global gold prices. The price of gold in Egyptian markets fell to 6120 EGP for 21-carat gold, which is the most widely traded. This represents a considerable decrease from the previous day's closing price of 6230 EGP. The decline in global gold prices was attributed to a rise in oil prices, which has fueled inflation concerns and potentially led to higher interest rates.
Globally, the price of gold fell by 3% to 4156.45 USD per ounce, marking the lowest level in over seven weeks. The decline was also reflected in the futures market, with December futures dropping by 3.1% to 4188.80 USD. This significant drop in gold prices is linked to the potential for higher interest rates, which could keep real US yields and the US dollar high, increasing the opportunity cost of holding gold, a non-yielding asset.
According to a Reuters report, the rise in oil prices and the likelihood of further US interest rate hikes are the primary drivers of the recent weakness in gold prices. This scenario could lead to increased short-term volatility in the precious metal. The FedWatch tool from the Chicago Mercantile Exchange showed that traders expect a 70.3% chance of a Federal Reserve interest rate hike in October.
In Egypt, the current prices for different gold carats are as follows: 24-carat gold is priced at 6994 EGP, 21-carat gold at 6120 EGP, and 18-carat gold at 5245 EGP. The price of a gold pound is 48,960 EGP. These prices reflect the sharp decline in gold prices in the local market.
The decline in gold prices is not limited to Egypt, as other precious metals also experienced significant drops. Silver prices fell by 4.8% to 61.17 USD per ounce, while platinum and palladium decreased by 2.4% and 2.2%, respectively. The prices of these metals are 1735.88 USD and 1239.60 USD per ounce, respectively.
Market participants are closely watching a series of upcoming US economic data releases, including job openings, the ADP employment report, and personal consumption expenditure (PCE) readings. These data points will provide valuable insights into future monetary policy decisions. The US Federal Reserve raised interest rates earlier this month and signaled potential further increases.
The significant decline in gold prices on Monday reflects the complex interplay of global economic factors, including oil prices, interest rates, and US economic data. As market participants continue to assess these factors, gold prices are likely to experience further fluctuations in the short term. The current prices reflect a challenging environment for gold investors.
Key points
- - Gold prices in Egypt and globally experienced a significant drop on Monday. - The decline in gold prices is linked to the potential for higher interest rates. - Other precious metals, including silver, platinum, and palladium, also experienced significant drops.
