Gold Prices Plunge as Rate-Hike Expectations Rise

Gold prices plummeted globally and locally on Monday as expectations grew that the US Federal Reserve would raise interest rates at this week's monetary policy meeting. The Fed's decision comes after strong US inflation data and renewed price pressures from rising oil prices.

The price of 21-karat gold fell by EGP 45 from Saturday's closing level to EGP 6,220 per gram in Egypt, while globally it declined by approximately $56, or nearly 1.3%, to $4,293 per ounce compared with Friday's closing price of $4,349.

The rise in the US dollar against the Egyptian pound limited the transmission of the full global decline to the local market. The dollar's selling price approached EGP 52 at some Egyptian banks, while indicative market trading placed the exchange rate at approximately EGP 51.89.

Gold prices in Egypt are primarily determined by the international price of gold and the dollar-pound exchange rate, alongside domestic supply, demand, and liquidity conditions. The discount of approximately EGP 55 per gram to its implied global value may reflect increased local supply, weaker demand, greater resale activity, and liquidity needs among some market participants.