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Billion gold: Gold loses 3% of its price at the start of the week… and a significant drop in investment demand for the yellow metal in Egypt



Billion gold: Gold loses 3% of its price at the start of the week... and a significant drop in investment demand for the yellow metal in Egypt

Global gold prices see a slight recovery during today’s session, Friday May 24, 2024, after recording their lowest level in two weeks earlier today, with gold on the verge to record its biggest weekly decline in more than 5 months, in light of falling expectations for interest rate cuts this year.

The spot price of gold recorded a two-week low early in today’s session at $2,325 an ounce, before climbing 0.6% to record its highest level at $2,342 per ounce. At the time of writing the Gold Billion technical report, this was the case. trading at the $2,340 per ounce level.

The price of gold has fallen 3% since the start of the week until today, after recording the all-time high earlier this week at $2,450 per ounce, after which the price of Gold began to fall significantly due to the changing view of the markets on the future of US interest rates.

The minutes of this week’s Fed meeting marked a major turning point in market sentiment, after the Fed showed that interest rates are expected to stay the same level for a longer period after inflation refused to slow down during the first quarter of this year.

The meeting minutes also showed discussions among members regarding the possibility of raising interest rates if inflation levels reached levels requiring such action. This led to a significant rise in the US dollar, pushing commodity prices, particularly gold, down.

Despite the drop in US dollar levels during today’s session, it is on track to register a weekly rise, increasing the negative pressure on global gold prices, which markets are anticipating for its weekly close during today’s session. firm below the 2365 level, we could see a further decline in gold prices.

Markets adjusted their expectations for the future of U.S. interest rates this year after the bank’s meeting minutes. Expectations for a rate cut in September have declined to almost equal expectations for a rate stabilization, while expectations for a rate cut next November have declined. , according to Gold Billion technical analysis.

On the other hand, the 10-year US government bond yield increased this week by 1%, and it has an inverse relationship with the price of gold, and a higher yield increases the opportunity cost gold, which does not allow us to return to its level. holders.

Despite the increasing chances of a decline in global gold prices during this period, overall expectations for gold’s performance remain very positive, especially with the gold/silver ratio falling, meaning the amount of money needed to buy one ounce of gold. , at its lowest levels since December 2022, considered a favorable area for gold buybacks.

Furthermore, China still strongly controls price action in the global gold market, and the latest data indicates that this is likely to continue, while Western investors are expected to soon join in increasing investment in the gold market. gold, as evidenced by the increase in cash flow to support investment funds. Recently, in European and American gold.

China’s private sector imported 543 tonnes of gold in the first quarter of 2024, and China’s central bank added another 189 tonnes to its reserves during the same period.

China is currently the biggest supporter of gold prices and the biggest price controller, as it is the largest buyer and consumer of gold in the world. China wants to diversify its huge cash reserves away from the dollar and thus increase its demand for gold, suggesting that its gold purchases will continue this year.

Gold Price in Egypt

Local gold prices have fallen since yesterday’s session, affected by changes in the global gold price, in addition to the maintenance of interest rates by the Central Bank of Egypt, which maintains the situation as it is in terms of the dependence of the local price on global movements of gold.

The most common 21 carat gold started today, Friday, at the level of 3,135 pounds per gram, and at the time of writing the Gold Billion technical report, it was trading at the level of 3,140 pounds per gram, after the fall of gold yesterday. of 20 pounds to close at the level of 3,130 pounds per gram after opening yesterday’s session at the level of 3,150 pounds per gram.

Yesterday, the Central Bank of Egypt announced that interest rates would be set at 27.25%, in line with expectations. The bank showed at its third meeting this year that after its exceptional decision on March 6 to increase interest rates by a whopping 600 basis points. and liberalize the exchange rate, inflation has shown a declining response and is on track to… Return to its usual pattern before March 2022.

In its statement, the Central Bank of Egypt also expects a significant decline in inflation in the first half of this year due to the tightening of monetary policy and the unification of the exchange rate.

Keeping interest rates unchanged at yesterday’s central meeting would keep gold prices at their current levels, as the price of gold currently depends on the movement in the global price per ounce of gold. gold in addition to gradual changes in the dollar exchange rate.

The current period is experiencing weakness in the demand for gold in general, and the investment demand for gold represented by gold bars and coins has decreased, while the demand for gold jewelry, which is characterized by a seasonal demand, remains.

On the other hand, the stability of the dollar exchange rate in official banks and its moderate and gradual evolution contributed to stabilizing the local price of gold and to the disappearance of price speculation operations with the disappearance of the parallel market, and thus the movements of gold became largely dependent on the evolution of the world price of gold.

Global and local gold price forecast

The price of an ounce of global gold saw a slight rise today Friday, after recording its lowest level in two weeks, with gold accepting its biggest weekly decline in over 5 months, supported by the rise of the dollar and expectations. that US interest rates will remain high for a longer period.

The local price of gold has decreased due to the drop in the global price of an ounce of gold, in addition to the fact that the Central Bank of Egypt yesterday set the interest rates without change, which means stability in the movements of the dollar exchange rate in official banks without major changes. changes, and therefore the local price of gold depends in its movements on the world price.

The global gold price fell to break through the $2,365 per ounce level and continue to fall to the $2,325 per ounce support level, which represents the close for gold this week. ascending trend line that was broken yesterday, this could mean more… Price decline in the coming period.

The goal is for the gold price to decline to $2,300 and then into the area of ​​$2,280 to $2,270 per ounce.

Regarding the local price:

The price of local 21 carat gold fell to cross the support level of 3,150 pounds per gram and recorded the lowest level at 3,130 pounds per gram and started fluctuating above this level. Trading is expected to continue to fluctuate between 3,130 and 3,170 pounds. per gram and depend on the evolution of world prices.

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