The demand of major central banks is one of the main causes that drove the international gold prices to rise to an all-time high of $2483.74 per oz on 17 July; however, currently, it rests at $2,400.14 per oz.

According to the J.P. Morgan Global Research estimates, gold is expected to reach $2500 per oz by the end of 2024.

Moreover, according to Bloomberg, Citigroup Inc. also speculated that gold will reach $3000 in the next 6 to 18 months due to increasing investor inflows and anticipations for the Federal Reserve to cut interest rates in September.

The rise in demand is mainly caused by geopolitical tensions, especially in the Middle East region, and global economic uncertainties.

Additionally, the anticipated US presidential elections are also one of the factors affecting the gold market.

The Egyptian gold market
 

Gold prices in Egypt recorded a high of approximately EGP 3800 per gram of 24k, EGP 3325 per gram of 21k gold, and EGP 2850 per gram of 18k gold on Wednesday in parallel with iSagha's announcement to halt declaring gold prices.

Gold reached higher prices during the first quarter of 2024 due to the foreign currency crisis as Egyptians used it as a hedge against currency depreciation.

 It marked EGP 4377 for 24k gold in January, which indicates that it was 14.3267 percent greater than it is now.

Head of Market Research at Gold Bullion Hussam Elagamy told Ahram Online that gold is mainly affected by three main factors: the dollar exchange rate, the international gold price, and the demand and supply, respectively.

Elagamy also added that the federal reserves’ decision to cut interest rates will likely raise gold prices, and international institutions have set a target of $2500 per ounce by the end of the year.

On another note, China, one of the main countries buying gold, halted its 18-month gold buying spree in June.

 According to Bloomberg, it was evident that the People’s Bank of China (PBOC) gold buying spree has been a major cause of the gold price hikes in May.

“Gold will witness a significant hike in prices in the future; all of the major central banks are currently using gold as a hedge especially China, India, and Taiwan as they are buying gold in enormous quantities which will raise the price of the ounce to reach $3000 by the end of the year,” as stated by the member of the Goldsmiths and Jewellers Association and also a local jewellery shop owner, Amir Rezk.

Rezk also noted that the best investment would be to buy gold now and sell it by the end of 2025 as it is expected that the 24k gold will reach EGP 5000 per gram.

He also stated that the best way to invest in gold is through bullion as the 24k gold gains more than 21K gold. When buying gold coins, a person is restricted to buying eight grams; however, the bullion offers a wide variety starting from one gram, he explained.

Rezk stated that the jewellery market is currently witnessing a complete recession and a small percentage of five percent in gold investment.

“There is a famous theory in Egypt that when the gold price decreases people refrain from buying gold and when the gold price is high, the demand for gold is also high,” stated Rezk.

According to the World Gold Council, the over-the-counter (OTC) investment in total gold demand marked a 4% year-on-year (YoY) increase to 1,258 tons coupled with a six percent rise YoY in the Central Bank net gold buying valued at 183 tons of gold, which was mainly driven by the need for portfolio protection and diversification.

Rafik El-Abbasy, former head of the Jewellery and Precious Metals Section of the Federation of Egyptian Industries (JPMFEI), told Ahram Online that gold is considered the best investment as it is the easiest to deal with except in the case where you need a monthly income.

El-Abbasy also stated, when asked about buying gold as a short-term investment, that it is wrong behaviour as gold is unpredictable and risky to buy in the short run.

He also stated that gold is a method of preserving the value of money, not making a profit.

Egypt's gold exports
 

Lotfy Monib, vice head of the Egyptian Gold and Jewellery Trade Division, told Ahram Online that the price set for gold in Egypt is ± 2 to 3 percent from the price of gold in the USA stock market due to supply and demand forces, depending on the need to either import or export gold.

Monib stated that given the current uncertain global conditions, including whether or not the federal reserves will lower interest rates, or whether Iran will respond to Israel, this could lead to a surge in gold prices or keep prices the same if the situation is contained, making it hard to speculate the gold prices in the future.

He also stated that Egypt is currently exporting jewellery as we have the designs and capability to manufacture it. We have been placed on the map of gold manufacturing as we import raw gold from abroad and manufacture it in Egypt, which marks an industrial breakthrough.

Monib stated that we hosted multiple international conventions and there will be another one in December where we showcase our gold manufacturing work.

It is worth noting that there was a zero-customs initiative on gold in May 2023 for six months that was extended for another six months to combat supply shortages in the market, especially during the USD shortage crisis in Egypt.