2023-04-30 16:25:29
Gold prices in Egypt recorded unprecedented historical levels in recent days, while specialists revealed to Al-Hurra the reasons for that rise, and their expectations regarding the price of the precious metal during the coming period.
And in Sunday’s trading, the price of a gram of 21 carat gold, which is the best-selling in Egypt, recorded 2,650 pounds, instead of 2,600 pounds, an increase of 50 pounds within one day, according to “Egyptian media“.
A 24-carat gram is traded at a price of 3028 pounds, and the price of an 18-carat gram is approximately 2271 pounds, and the price of a gold pound is 21,300 pounds.
historical precedent
In his interview with Al-Hurra website, Fadi Kamel, Executive Director of Egypt Gold Company, reveals that gold prices jumped in the Egyptian market by 21.4 percent during April 2023 transactions, at a time when the ounce rose by nearly 1 percent on the global stock exchange.
Kamel explains that gold prices rose by 470 pounds in the Egyptian market during the month of April, in a precedent that is the first in the history of Egypt.
According to Kamel, a gram of 21 carat gold opened the monthly transactions at the level of 2200 pounds, touched the level of 2900 pounds, and concluded the month’s transactions at the level of 2670 pounds.
While the ounce rose by $20 on the global stock exchange, as trading opened at the $1970 level and touched the $2010 level, transactions closed at the $1990 level, according to Kamel.
On Friday, spot gold fell 0.3 percent to $1,982.65 an ounce, but it remained up 0.8 percent for the month of April, according to Archyde.com.
Gold rose to the highest level in a year, when the price of an ounce reached $ 2048.71 in mid-April.
What are the reasons?
In statements to Al-Hurra, an economist specialized in gold markets, Walid Farouk, enumerates the reasons for the historical rise in the price of the precious metal.
He says that gold prices are linked to three factors: “the global stock exchange, the dollar exchange rate in the official market, and supply and demand in the local market.”
He explains that the Egyptian government stopped importing gold due to the lack of hard currency in the local market, and this caused the Egyptian market to shift from “open to closed.”
After the Egyptian market became “closed”, the only outlet became “smuggling from the Sudanese market”, and between 50 and 100 kilograms of gold were entering Egypt daily from Sudan, according to Farouk’s words.
And he confirms that following the outbreak of clashes and fighting in Sudan, “that outlet stopped completely,” which increased “the closure within the Egyptian market,” so whoever owns gold is able to price it.
With the decline in the exchange rate of the pound, gold has become a “safe haven” for the majority of Egyptians, which has increased the demand for the precious metal, amid scarcity and lack of supply, according to Farouk.
Egypt is suffering from a suffocating hard currency crisis, which has led to a drop of the pound by nearly 50 percent once morest the dollar.
Since March 9, 2023, the Egyptian currency has been trading at regarding 30.90 per dollar, while its price in the “black” parallel market is regarding 36 pounds per dollar, according to Archyde.com.
Manipulation and parallel market?
Kamel believes that gold prices in the Egyptian market are proceeding according to “organized chaos,” speaking of “suspicion of price manipulation.”
He says that gold has emerged from being a commodity priced according to specific factors, such as the global price and the exchange rate of the dollar in the local market, to a commodity subject to the whims of supply and demand.
He points out, “The lack of real data and statistics, monitoring the number of gold shops, and the volume of sales and trading operations in the markets.”
This caused the emergence of an informal parallel market for gold trade, “the volume of its production cannot be limited,” according to his speech.
Farouk agrees with him, who refers to the existence of a “parallel market for gold trade.”
“The government is benefiting from the current situation, with some speculating in gold away from the dollar in light of the shortage of hard currency,” he says.
Farouk talks regarding “the monopoly of some traders on the market and their manipulation of the prices of the precious metal.”
Some major traders resort to “reducing gold prices to push citizens to sell what they have of the precious metal, before they resell it at a higher price, which turned the Egyptian market into an auction,” according to his statement.
Farouk points out that these reasons combined made “the gold standard escape in Egypt.”
Sell or buy gold?
He advises all citizens not to sell their gold, except for necessity, due to a new expected rise in the prices of the precious metal, as it is a safe haven at the present time.
Farouk agrees with him, who advises citizens to “buy gold”, but without rushing when doing so.
“Gold prices are unstable, and citizens can buy when the price drops,” he says.
Citizens can buy “gold or ingots, according to the need and use of each person, given that there are no significant differences in the price of workmanship,” according to Farouk.
new increase?
It is likely that the demand for the precious metal will increase in the coming period, which will cause a new rise in the price of gold.
Farouk agrees with him, who expects a new rise in gold prices in the Egyptian market.
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