Gold loses steam awaiting US jobs data

Asmaa Mostafa,Tuesday 5 Dec 2023

Gold prices experienced a slight decline on Tuesday, trading $100 below the previous session's record high, as investors are eagerly awaiting upcoming US economic data, which could potentially impact the Federal Reserve's rate outlook.

Gold bars. BTC.
Gold bars. BTC.


Spot gold decreased by 0.1 percent on Tuesday, reaching $2,027.49 per ounce, according to Trading Economics.

The precious metal had reached an all-time high of $2,135.40 per ounce on Monday but subsequently dropped over $100 in a single day, resulting in a 2 percent decrease at the close.

This surge was primarily influenced by various factors, including the decline in the US dollar index and ongoing expectations of potential interest rate cuts by the Federal Reserve in the first half of 2024, along with the persistent impact of the Israeli war on Gaza, which boosted demand.

Notably, lower interest rates reduce the opportunity cost of holding non-interest-bearing bullion like gold.

Since the eruption of the Israeli war on Gaza in early October, gold prices have steadily increased from approximately $1,900 per ounce to $2,069.01 on Monday.

According to a report by Dahab Masr, it is anticipated that gold will surpass the $2,200 mark before the end of the second quarter of 2024.

This optimistic outlook instills confidence in the sustainability of the upward trend in gold prices, encouraging investors to consider gold as a long-term investment and a hedge against market volatility.

The World Gold Council (WGC) released a report in May, indicating that 24 percent of central banks worldwide intend to increase their gold reserves within the next year, driven by growing pessimism towards the US dollar.

Gold prices in Egypt

In Egypt, the surge in global gold prices and market fluctuations have also impacted local gold prices, driven by geopolitical tensions and conflicts within the country's borders.

The price of 21-carat gold in Egypt has exceeded EGP 2,800, experiencing a significant increase, Dahab Masr noted.

​In Tuesday's session, the price of 21-carat gold slightly decreased by EGP 20 for purchase, reaching a value of EGP 2,800 per gram.

Since the outbreak of the Israeli war in October, gold prices in Egypt have risen from around EGP 2,165 for 21-carat to EGP 2,820 on Monday, representing a 23.2 percent increase.

Dahab Masr emphasizes that the gold trade should be approached as a long-term hedging tool rather than a means for speculation or quick profits. Considering gold as an investment asset is crucial for investors, especially given its potential as a hedge against market uncertainties.

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