Severe volatility is the most accurate description of the performance of the global and local gold market over recent weeks.
The market has witnessed one of its most dramatic episodes since the beginning of the current decade. While investors were preparing to celebrate new record highs, headwinds abruptly shifted course, sending the traditional safe haven into a state of free fall, reshaping the landscape and opening the door to a host of questions.
Has gold lost its lustre as a hedging tool, or is what we are seeing merely a pause before a more aggressive upward cycle?
On 30 January, global trading screens recorded one of gold’s harshest days in 13 years, as prices fell by 8.5 per cent in a single session, and the price of an ounce fell to $4,745 from record highs of $5,480 on the same day.
This decline was not driven by weak demand, but rather by a reaction to shifts in US monetary policy and specifically following US President Donald Trump’s nomination of Kevin Warsh as the new chairman of the Federal Reserve, the US central bank. Warsh is viewed by markets as an independent voice that will not give in to Trump’s demands for unwarranted rate cuts.
The nomination sent signals to markets of a potential move towards tighter monetary policies and higher interest rates, pushing up the US dollar and bond yields, the historical competitors of gold. Gold has been less attractive for investors seeking returns when the dollar is strong and US interest rates are high.
Mohamed Hisham, an economic analyst and CEO of Money Talks Consulting, told Al-Ahram Weekly that what is happening can be described as a “historic repricing” driven by the breaching of unprecedented global price barriers.
Nevertheless, Swiss bank UBS said in a recent report that the sharp drop in gold prices represents a “technical correction” within a broader bullish cycle. Despite the severity of the short-term decline, gold has still maintained gains of around 13 per cent since the beginning of the year, reflecting a structural strength that prevents a full-scale collapse, it said.
At a time when fear dominates the market, major financial institutions such as UBS are outlining a different roadmap. They reject the notion that the bull market on gold has ended, noting that historical gold cycles only conclude following profound structural shifts that are not currently in sight.
UBS analysts expect prices to remain within a range of $4,500 to $4,800 per ounce in the short term, supported by pressures stemming from heightened volatility.
Analysts at JPMorgan, the US investment bank, have also maintained their forecasts for gold prices to reach $6,300 per ounce by the end of the year, driven by growing demand from central banks and investors.
The strategic bet for 2026 remains centered on interest-rate cuts, with estimates suggesting that the US Federal Reserve may cut rates twice this year, a move that would restore momentum to the precious metal.
In addition, demand from global central banks remains at historically high levels, as countries seek to diversify their reserves away from fiat currencies, creating a “solid floor” that prevents prices from deteriorating further.
The Egyptian market has not been immune to these shocks, yet it has displayed a unique characteristic related to consumer behaviour. Over the past year, Egyptian goldsmiths have witnessed a structural shift in purchasing culture, with declining appetite for gold jewellery in favour of rising demand for bullion and gold coins.
Data recently released by the World Gold Council show that Egyptian jewellery purchases in 2025 amounted to 21.5 tons, the lowest level ever recorded by the market, excluding 2020 during the Covid-19 pandemic.
In comparison, in 2010 Egyptians purchased 53 tons of jewellery, indicating a decline of more than 50 per cent by 2025. This retreat does not signal weaker purchasing power but reflects an investment shift as people increasingly prefer allocating their money to raw gold free from the high manufacturing costs that erode resale profits.
Hisham believes that persistently high gold prices may translate into some stagnation in the jewellery market in favour of bullion, which has emerged as the primary hedging option for Egyptian consumers.
He added that the world is witnessing what may be a serious phenomenon in today’s markets: for the first time, gold is breaking price peaks while US Treasury bond yields remain elevated.
This paradox signals that the world has stopped valuing gold as an alternative investment governed by interest rates and has begun treating it as a “lifeline” and the ultimate hedge against US sovereign debt risks.
Hisham believes this shift has driven changes in Egyptian purchasing behaviour, transforming gold from an ornament into an investment necessity. As jewellery sales have declined, bullion and gold coins accounted for 52.2 per cent of total gold purchases in Egypt in 2025, a radical shift compared with 2021 when bullion represented just 7.2 per cent of the market, World Gold Council data showed.
This trend peaked in the final quarter of 2025, when Egyptians rushed to purchase around 7.4 tons of bullion and coins, the highest quarterly level recorded in more than a year and a half.
The investment surge indicates that, within the Egyptian collective mindset, gold has clearly become a hedge against both local and global volatility.
* A version of this article appears in print in the 5 February, 2026 edition of Al-Ahram Weekly
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