Israel-Iran Ceasefire Weakens Gold Demand as Markets Await Powell's Testimony
Waleed Farouk
Gold prices recorded a notable decline in both local and global markets on Tuesday, driven by a calming of geopolitical tensions following the announced ceasefire between Israel and Iran. This development has reduced demand for safe-haven assets, while investors now turn their attention to Federal Reserve Chair Jerome Powell's testimony before the U.S. Congress, which could shape the outlook for monetary policy in the near term.
In the local market, gold prices dropped by EGP 130 per gram compared to the previous day's close. The 21-karat gold fell to EGP 4,690 per gram, while the global ounce price declined by $54, reaching $3,315.
Other local gold prices were as follows:
24-karat: EGP 5,360
18-karat: EGP 4,020
14-karat: EGP 3,127
Gold pound: EGP 37,520
Yesterday, gold prices in the local market had seen a modest increase of EGP 20, with the 21-karat gram opening at EGP 4,800 and closing at EGP 4,820. Meanwhile, the global gold market experienced volatility, with prices ranging between $3,369 and $3,395 before closing again at $3,369.
Gold Faces Selling Pressure, But Fed Policy May Shift the Trend
Gold is currently facing strong selling pressure, with safe-haven assets underperforming after the ceasefire between Israel and Iran. However, the yellow metal could regain momentum if the Federal Reserve signals a potential shift in its monetary policy stance — particularly any hints toward a rate cut in the near term.
Notably, Fed Vice Chair Michelle Bowman, speaking at a meeting in Prague, said that the time may be ripe for lowering interest rates, especially as labor market pressures mount and the inflationary impact of former President Donald Trump's proposed tariff policies appears limited.
Bowman stated: 'If inflationary pressures remain under control, I would support lowering the federal funds rate as early as our next meeting, to move it closer to a neutral stance and preserve labor market strength.'
Powell's Testimony: A Pivotal Market Event
All eyes now turn to Federal Reserve Chair Jerome Powell, who is scheduled to deliver the Fed's semiannual monetary policy report to the House Financial Services Committee today and tomorrow. Market participants will be closely watching for any shifts in tone that might suggest a change in the Fed's policy path — particularly regarding the timing of potential rate cuts.
The report, published last Friday, highlighted early signs that tariffs are contributing to inflationary pressures, while reaffirming that current monetary policy is well-positioned to address upcoming challenges.
Lawmakers are expected to press Powell on several key issues:
The future path of interest rates
Inflation developments
The overall economic outlook
Potential impacts of Trump's trade policies and ongoing geopolitical uncertainties
If Powell signals that more data is needed before committing to a July rate cut — and stresses the need for patience — markets may respond with a stronger U.S. dollar against rival currencies. On the other hand, if Powell leaves the door open for policy easing in July, a sharp sell-off in the dollar could follow. His comments on inflation expectations, especially in light of rising energy prices due to ongoing tensions in the Middle East, could further influence the dollar's trajectory.
A Data-Heavy Week Ahead
Beyond Powell's testimony, markets are also bracing for a flurry of key U.S. economic data releases this week, including:
Consumer Confidence Report (Tuesday)
New Home Sales Data
Jobless Claims, Durable Goods Orders, and GDP Figures (Thursday)
Core PCE Inflation Data (Friday)
These indicators are expected to play a decisive role in shaping the Federal Reserve's policy decisions moving forward — and, by extension, will significantly influence gold market dynamics in the days ahead.
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