Global gold prices are currently experiencing a downward trend, driven by a combination of economic and monetary factors that have reshaped investor sentiment toward the precious metal. Chief among these factors are U.S. monetary policy, the strength of the U.S. dollar, and developments on the supply side of the global market.
In this context, economic expert Baher Abdel Aziz stated that the U.S. Federal Reserve’s decision to keep interest rates unchanged reflects the continuation of a tight monetary policy stance aimed at curbing inflation, which has reduced gold’s appeal as a hedging instrument, particularly amid the continued strength of the U.S. economy and stable growth indicators.
He explained that a high or stable interest rate environment typically supports yield-generating assets, most notably bonds and the U.S. dollar, while dampening demand for gold, which does not offer periodic returns. This dynamic, he noted, accounts for a significant portion of the current downward pressure on gold prices.
Abdel Aziz pointed out that the strength of the U.S. dollar represents a key driver in gold’s price trajectory. A stronger dollar makes gold more expensive for buyers using other currencies, thereby curbing global demand and exerting additional downward pressure on prices, especially since gold is priced internationally in U.S. dollars.
On the supply side, Abdel Aziz highlighted that Russia, one of the world’s largest gold producers, has moved to offer price discounts on its gold exports in several markets, particularly in Asia and Africa, in order to offload production amid ongoing restrictions and sanctions. This has increased global supply at lower price levels, further weighing on international gold prices.
He added that global gold prices are determined by a complex set of interconnected factors, including overall production levels, investment and consumer demand, movements in the U.S. dollar, monetary policies of major central banks, and geopolitical developments. In addition, benchmark prices are set through major global exchanges such as the London Bullion Market Association (LBMA) and the New York Mercantile Exchange (COMEX), which serve as reference points for traders worldwide.
Regarding future expectations, Abdel Aziz said that gold is likely to remain under short-term pressure as long as the dollar remains strong and U.S. interest rates stay at their current levels. However, any shift by the Federal Reserve toward interest rate cuts, or signs of a global economic slowdown, could restore upward momentum for gold as a safe-haven asset.
He also noted that the continued flow of discounted Russian gold into emerging markets will remain an influential factor in shaping global supply and demand dynamics, and consequently, price movements.
Abdel Aziz advised investors to adopt balanced investment strategies based on portfolio diversification and to avoid relying solely on gold as a hedging tool. He emphasized that gold remains an important long-term asset, but should be approached with a well-considered strategy and close monitoring of U.S. monetary policy and dollar movements.
He concluded by stressing that the current decline in gold prices reflects a complex economic interaction between monetary, pricing, and production-related factors, rather than a temporary or isolated movement, underscoring the importance of comprehensive market analysis before making investment decisions.