Gold prices have increased locally by approximately 6.7 percent since the beginning of March, with the price of 21-carat gold rising from EGP 4,050 per gram to EGP 4,320 per gram.
Since the beginning of the year, prices have jumped by almost 15.7 percent to reach EGP 4,320 per gram, up from EGP 3,735 per gram registered on 1 June.
In recent months, gold prices have surged dramatically, prompting speculation about the factors driving this trend and its implications for consumers. Experts predict a further increase of approximately 10 percent by the end of the year, fueled by rising demand from major economies, geopolitical tensions, and escalating mining costs. As gold solidifies its status as a safe-haven asset amid economic uncertainty, shifts in consumer behavior and investment patterns are reshaping the market landscape. This article explores the contributing factors to gold's upward trajectory and what it means for the future of this precious metal.
Globally, gold price hit a new peak on Friday amid fears that the Trump trade war could expand. That said, the global price has accelerated by 17 percent since the start of the year, reaching $3,085 per ounce.
Growing demand from major economies
One of the main reasons for the price increase is the growing demand from major economies such as India, Russia, and China.
Gold market expert Amir Rizk told Ahram Online that these countries, holding approximately $13 trillion in financial reserves, prefer investing in gold rather than the US dollar, which has driven prices higher.
Central banks and investors seeking hedging against shocks
Rizk explained to Ahram Online that central banks worldwide are increasing their gold reserves as a hedge against financial risks, particularly in the face of economic instability. Additionally, individual investors are turning to gold to protect their wealth from the uncertainties brought about by global conflicts and political tensions.
Another contributing factor to the price surge is the rising cost of gold extraction. The increasing complexity and cost of mining operations directly impacted global gold prices.
Decline in consumer sales
Rizk noted that the first three months of 2025 have been among the worst periods for the gold market, as sales remain stagnant. The primary reasons behind this slowdown include soaring gold prices and shifting consumer priorities, with people focusing more on essential goods due to the rising cost of living.
Gold investment has become more prevalent compared to consumer purchases. In 2022 and 2023, gold jewelry accounted for 60 percent of total sales, but this figure dropped to just 20 percent in 2025. Meanwhile, demand for gold bars and coins has surged to 60 percent, reflecting a shift in consumer behavior.
Future price expectations
Rizk predicts that gold prices will continue to rise in the coming months. The price of 21-karat gold, the most traded in the Egyptian market, is expected to reach between EGP 4,500 and EGP 4,700 per gram by September—an increase of EGP 450 (about 10 percent) in just one year.
Hassan Ali, Executive Director at Big Invest Company, confirmed that the price jumps in gold are attributed to geopolitical tensions this year, including the Russia- Ukraine war and developments in the Middle East, which have significantly increased demand for gold as a safe haven.
Ali explained that other economic factors contributed to the rise in gold prices, including a shift in monetary policies towards lowering bank interest rates, which enhanced the global appeal of gold.
Another factor is the economic war between the USA and several countries, spurred by President Trump's protectionist policies and imposing tariffs on imports from various countries.
Ali expected global gold prices to continue rising to levels of $3,500 per ounce in the first half of 2025. However, he predicted a temporary price pullback likely this month due to profit-taking that may occur in the gold market following the recent buying saturation.
He added that this temporary decline represents an excellent opportunity for everyone to make purchases again before it resumes its upward journey to reach the targeted levels.
Political unrest and inflation drive prices up
Ehab Wassef, an adviser to the Gold and Mining Division at the Chamber of Metallurgical Industries, attributed the recent price hike—particularly in the last 10 days leading up to Ramadan—to global inflation and ongoing geopolitical conflicts. He added that the overlap of Ramadan with the academic season further dampened sales, following a period of sluggish demand during Mother's Day.
Lighter gold jewellery designs
Some manufacturers have started producing lighter-weight gold jewellery to cope with weak consumer purchasing power. However, Wassef pointed out that this strategy does not significantly benefit traders, as their profits are tied to the total grams sold rather than a percentage-based margin.
Wassef told Ahram Online that the continuous rise in gold prices has discouraged owners of gold bars and coins from selling their holdings. Instead, they opted to wait for further price increases. This reluctance to sell has led to a supply shortage in the market, exacerbating the slowdown in sales.
Gold sales in 2024
According to the World Gold Council, Egyptians purchased 26.1 tons of gold jewellery in 2024- a two percent decline from the previous year. In contrast, the demand for gold bars and coins grew by seven percent in the fourth quarter alone, highlighting the increasing preference for gold as an investment rather than a consumer product.
In response to Ahram Online's question about selling gold on installment to revitalize the market, Wassef emphasized that this system does not suit the nature of the gold market due to constant price fluctuations. He clarified that keeping gold jewellery in stores is the best option for merchants, as its value increases over time without them incurring any additional costs.
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