Gold Prices Fall by 2% Amid Rising Yields and Stronger Dollar

Global gold prices fell by about 2% in a week due to rising US Treasury yields, a stronger dollar, and growing expectations of another interest rate hike. The decline was evident in Egypt's local market as well, with Marsad Al Dahab reporting that the price of 21-karat gold dropped by EGP 10 from Friday's close to EGP 6,230 per gram. In the global market, the ounce lost around $93 an ounce over the week ending Friday.

The price of gold had shown some resilience earlier in the week, gaining $11 during a session on Friday, September 18. However, the momentum was short-lived as the dollar strengthened and traders renewed their bets on further monetary tightening. Pressure intensified in the second half of the week with Fed officials signaling support for additional tightening and the yield on the 10-year US Treasury note approaching its highest level in nearly two decades.

The Federal Reserve's decision to raise interest rates by a quarter of a percentage point to 3.75%, 4% on September 16 added to the downward pressure on gold prices. Marsad Al Dahab expects continued monetary tightening and elevated yields to keep gold under pressure in the near term, although the institution notes that interest rates alone do not provide a complete reading of the market.