Samia al - Faqi
The gold and precious minerals division of the Union of Egyptian Industries has confirmed that the world gold markets are entering a crucial week with many variables affecting price movements, in the light of accelerated political developments in the Middle East region, notably the announcement of the near final signature of a comprehensive peace agreement, as well as the endorsement of the decisions of the United States Federal Reserve Board at its forthcoming meeting on Wednesday.
Ihab Wasif, head of the gold and precious minerals division of the Union of Egyptian Industries, said that world markets had responded positively to recent developments, after the United States President Donald Trump had announced a cessation of the military offensive against Iran, followed by the announcement of the approach to a final peace agreement in the region, which had improved investor morale and pushed gold prices to rise by more than $200 per cent, following a decline in precious metal.
Peace efforts in the Middle East
Wasif explained that the success of peace efforts in the Middle East, with the continued circulation of oil prices below the level of $90 per barrel and the normal return of commercial navigation through the Hem symbol Strait, would restore stability to world markets and support medium-term economic and commercial activity, which would reflect the movement of investments and markets for various goods, primarily gold.
He noted that the World Bank had a strong opportunity to resume the upward trend in the coming period, targeting levels that might reach $4400 per se, supported by continued investment demand for gold as one of the most important instruments of precaution against global economic and financial volatility.
The Egyptian market would be directly affected by those developments, as gold was expected to move domestically towards a rising global price, particularly as the domestic market continued to be linked to the global agenda and developments in international markets.
The Chief of the Gold Division confirmed that this week, investors were watching two major events that would have a direct impact on markets, the first being the formal declaration of the Middle East Peace Agreement, the second being the meeting of the United States Federal Reserve Council, the first being chaired by Kevin Warsh after assuming the leadership of the United States Central Bank.
Financial markets were currently setting close to 60% probability for the United States federal taking a tighter position on monetary policy, which might include new references to the possibility of raising interest rates during the coming period, which was a gold pressure factor once the trend was confirmed to move interest against United States inflation, which had been highest in more than 3 years.
A tightening of American monetary policy
Any hints on the part of the Federal Reserve towards tightening monetary policy or raising interest rates might lead investors to re-evaluate their gold investment centres as an asset that did not generate return, while continuing caution or maintaining the current policy without further tightening could support the current upsurge of precious metal.
He stressed that world markets were experiencing a situation of extreme forecasting, and that the gold movement in the coming days would depend heavily on the results of the United States Federal Meeting and the developments in the Middle East political file, with the expectation that high levels of price volatility would continue until the vision of those two files was clarified.
