A worker stands in front of his gold jewellery shop at the market of Khan el-Khalili in Old Cairo (Reuters)
Prices for 21-karat gold in Egypt recorded EGP 2,130 on Monday, down from EGP 2,200 yesterday, while prices for 24-karat and 18-karat gold gram dropped to EGP 2,434 and EGP 1,826 respectively down from EGP 2,514 and EGP 1,886.
The decline in prices comes after an unprecedented rise in gold prices over the past two weeks before they started to decline on Sunday.
Gold prices increased rapidly after a Thursday decision by the Central Bank of Egypt (CBE) to increase key interest rates for the first time in 2023 by two percent (200 bps) amid soaring inflation.
However, new CDs issued by NBE and Banque Misr -- the first of which is with a fixed yield of 19 percent disbursed monthly, while the second is with a decreasing yield of 22 percent -- managed to turn the tables.
Ahmed Moaty, chief economist and a financial market expert, said the decline in gold prices, which started over the past two days, occurred as the value of the Egyptian pound remained unchanged after the CBE's decision to raise interest rates.
In remarks to Ahram Online, Moaty noted that demand on gold was on the rise right after the decision, as many people thought that the value of the pound will decrease against the US dollar amid increased interest rates.
However, the issuance of the new CDs led many people to put their money in the banks instead of buying gold, which led to a decrease in gold prices, he added.
Moaty said he thinks that buying gold is still a good long-term investment as gold prices keep rising over the years.
The recent CBE decision to hike key interest rates comes amid efforts to curb soaring inflation caused mainly by the war in Ukraine and the global supply chain disruptions.
Egypt’s headline inflation surpassed 31 percent in February, while the core inflation exceeded 40 percent in the same month, according to the latest official figures.
In 2022, Egypt hiked its key interest rates by a total of eight percentage points (800 bps) as a key tool to tame accelerated inflation.
Internationally the gold ounce recorded a $51 decrease, priced at $1,950 on Monday, up from the $2,001 registered two weeks ago, according to the Egyptian Gold and Jewellery Trade Division of the Egyptian Federation of Egyptian Chambers of Commerce (EGAJTD).
EGAJTD is not responsible for pricing and monitoring in the local market but only announces the prices at which gold is traded.