Gold prices recorded strong gains in both local and global markets during February, supported by a weaker US dollar and heightened demand for safe-haven assets amid escalating geopolitical tensions in the Middle East and the ongoing US-Israeli-Iran conflict, according to a report by iSagha.
Saied Embaby, Executive Director of iSagha, said local gold prices rose by 10% over the month, with 21-karat gold gaining EGP 700 per gram. The most actively traded 21k gold opened February at EGP 6,825 and closed at EGP 7,525.
Globally, gold prices increased by 8% during the month, posting gains of $384 per ounce. The metal opened at $4,895, hit a record high of $5,296, and closed February at $5,279 per ounce.
Embaby noted that domestic gold prices climbed 9% last week alone, in parallel with a 3.3% rise in global prices, as investors renewed their appetite for safe-haven assets amid intensifying geopolitical risks.
Over the past week, 21k gold rose by EGP 600, advancing from EGP 6,925 to EGP 7,525, while the global ounce gained approximately $171, increasing from $5,108 to $5,279 by week’s end.
According to the latest figures, 24k gold was priced at around EGP 8,600 per gram, 18k gold at EGP 6,450, and the gold pound coin at approximately EGP 60,200.
Embaby said the local market witnessed volatility and pricing discrepancies, particularly after some traders temporarily suspended pricing following the US-Israeli strike on Iran and the closure of global markets over the weekend.
He added that some dealers priced gold at more than EGP 400 above fair value as a precautionary measure, anticipating a strong opening in global markets at the start of the week amid elevated risk premiums.
Spot gold recently traded above $5,279 per ounce as tensions in the Middle East deepened. Analysts suggest that any further deterioration could push the metal to fresh record highs, while crude oil prices may also rise sharply on concerns over supply disruptions.
Future price trends, Embaby said, will largely hinge on the scale and nature of Iran’s response and whether the conflict expands. In the event of significant escalation, gold could emerge as the primary safe haven for global capital flows, potentially setting new historic peaks.
Oil prices also advanced this week, with Brent crude reaching its highest level in six months. In a worst-case scenario, prices could exceed $130 per barrel if oil facilities in Gulf countries are targeted, disrupting a significant share of the region’s estimated 18 million barrels per day in supply.
According to Reuters, citing four trade sources, several major oil companies and trading houses have suspended oil and fuel shipments through the Strait of Hormuz following the US-Israeli attack and Tehran’s announcement of the closure of navigation routes.
On the economic front, the US Department of Labor reported that the Producer Price Index (PPI) rose 0.5% in January, up from 0.4% in December and above expectations of 0.3%. On an annual basis, the index increased by 2.9%.
Core PPI, which excludes food and energy, rose 0.8% month-on-month — exceeding forecasts of 0.3% — and climbed 3.6% year-on-year, above estimates of 3%.
Some analysts believe persistent inflationary pressures could prompt the Federal Reserve to delay interest rate cuts. However, markets are still pricing in around 58 basis points of reductions this year, with expectations that the first cut could be deferred to the Fed’s 29 July meeting.
Amid sustained geopolitical tensions and uncertainty surrounding developments in the Middle East, precious metals are expected to retain their appeal as safe-haven assets. Nevertheless, heightened volatility warrants caution, with close monitoring of political developments and US economic data remaining key to shaping both global and domestic market trends.
