The US-Israeli war on Iran has added volatility to the gold market, driving local prices to record levels and reinforcing expectations that the precious metal will remain a key hedge in the months ahead.
In Egypt, the gold sovereign climbed to more than EGP 61,000 before easing to about EGP 57,800 by the end of Thursday’s trading, down from nearly EGP 60,000 a week earlier.
The movement mirrored global trends, where the ounce rose to around $5,330 before retreating to about $5,171.
A gold sovereign is an eight-gram coin typically used for investment and savings. In Egypt, it is widely known as the geneih dahab.
Market analysts told Ahram Online that the recent fluctuations reflect a mix of regional tensions, shifting global investment flows, and movements in the US dollar.
Ahmed Moaty, chief executive of VI Markets Egypt, told Ahram Online that the recent decline in prices does not necessarily signal a weakening outlook for gold.
“The main reason lies in what markets call investment rotation, where some investors shifted toward hedging through the US dollar,” Moaty said.
He explained that the US dollar index climbed to around 99 points, gaining roughly two to three percent as investors diversified their safe-haven holdings.
“During crises, several assets compete for safe-haven status, including the US dollar, the Japanese yen and the Swiss franc. Recently, however, the dollar was the only currency that strengthened significantly, temporarily pressuring gold prices,” he added.
Moaty also noted that rising oil prices during the current crisis have supported the dollar, prompting some global investment funds to increase allocations to dollar-denominated assets.
At the same time, declines in US stock markets pushed some investors to liquidate part of their gold holdings to secure liquidity and rebuild equity positions at lower prices.
He said similar market behaviour occurred earlier this year, when gold temporarily declined amid shifts in global investment flows.
Local market dynamics
While international factors largely determine gold prices, the Egyptian market also reflects local dynamics.
In Egypt, prices are influenced not only by global ounce rates but also by the exchange rate between the US dollar and the Egyptian pound, in addition to domestic supply and demand.
Saeed Embaby, chief executive of the iSagha gold trading platform, told Ahram Online that local prices generally move in line with global markets, though domestic factors can shift prices by five to 15 percent.
“The ounce may be stable globally, but prices in Egypt could rise due to higher demand for bullion or increases in the dollar exchange rate,” Embaby said.
He added that any major military escalation, particularly involving global powers such as the United States or Israel, tends to drive investors toward safe-haven assets, with gold at the forefront.
Shift in consumer behaviour
Egypt’s gold market has also seen a noticeable shift in consumer behaviour in recent years.
Demand has increasingly moved away from jewellery and toward bullion and gold sovereigns, reflecting a growing perception of gold as an investment vehicle rather than solely a decorative asset.
Embaby said demand is now concentrated in bullion and coins because they carry lower manufacturing costs than jewellery.
“This trend reflects growing investment awareness among Egyptians seeking the highest savings value at the lowest cost,” he said.
Gold has also become more attractive as a store of value following waves of inflation and currency volatility in Egypt in recent years.
Outlook for gold
Analysts say continued regional tensions could support gold prices in the medium term despite short-term volatility.
Moaty said the persistence of regional conflicts suggests the broader trend for gold remains upward, even if the market experiences temporary pullbacks.
He added that price levels near $5,000 per ounce could encourage Asian markets, particularly China, to increase gold purchases, providing additional support for global demand.
Moaty also noted that the US Federal Reserve typically does not favour a strong dollar for prolonged periods, suggesting that future policy shifts could ease pressure on gold.
However, higher oil prices could fuel global inflation, potentially prompting the Federal Reserve to keep interest rates elevated for longer, a factor that could weigh on gold in the short term.
Embaby said the direction of global monetary policy will remain one of the key drivers of gold prices in the coming period.
If interest rates begin to fall, he noted, demand for gold could strengthen again and push prices toward new highs.
Despite recent fluctuations, both analysts say gold will likely remain central to Egypt’s savings and investment landscape as regional tensions continue to ripple through global markets.
Short link: