Prices of gold in the Egyptian market witnessed record highs on Friday following a series of spiralling increases over the last few weeks.
The prices of gold on Friday reached a whopping LE3,200 per gram of 24 carat gold, LE2,800 for 21 carat gold, and LE2,400 for 18 carat gold, while gold coins (eight grams of 21 carat gold) reached LE22,400.
Prices started to drop gradually amid some fluctuations starting at the beginning of this week, reaching LE3,000 for 24 carat gold, LE2,600 for 21 carat gold, and LE2,220 for 18 carat gold. Gold coins went down in price as well to reach less than LE21,000.
Despite the fluctuations in the local gold market and the relative stability of global gold prices at around $2,000 per ounce, demand has risen to unprecedented levels locally.
The price of gold in the Egyptian market is determined by several factors, including the price of the dollar, the supply and demand for the yellow metal, and the market’s response to inflation and the policies of the Central Bank of Egypt (CBE).
Nagui Farag, advisor to the Minister of Supply for gold affairs, said that the reason for the rise in gold prices in Egypt compared to global prices was mainly due to a rush by consumers to buy gold products as a safe haven from an anticipated fall in the value of the local currency against the dollar.
However, the price of the dollar is not the main reason for the recent rise in prices, he said. The reason is the high demand for gold and a decrease in supply.
Farag added that international economic institutions expect gold prices to reach $3,000 per ounce in June, as a result of the economic war between the US, Russia, and China.
He said that a recent proposal by the Ministry of Supply to allow Egyptians abroad to enter Egypt with the equivalent of $10,000 worth of gold, or between 100 and 150 grams, without needing to go through customs would lead to an increase in supply that could help to stabilise the market.
Minister of Supply and Internal Trade Ali Moselhi said on Saturday that a proposal has been made to allow Egyptians expatriates and returnees to enter the country with a specific amount of gold for a specified period without going through customs.
The proposal will be discussed with the Chamber of the Gold Industry to reach a consensus.
He also said during a press conference on Saturday that the government is working on limiting the increases in gold prices, adding that the amount of gold in Egypt is limited and prices normally rise with high demand.
“The return of prices to normal will take time,” he said, adding that the price of a gram of 21 carat gold, the most popular locally, should not exceed LE2,100.
“We have never seen demand for gold products like it,” said Mena Rizk, the owner of a gold shop in the Gold Mall in 6 October City. He said that it could feel like a supermarket, and not simply a shop, because of the unprecedented demand for gold coins and bars.
Gold retailers take into account the price of the US dollar on the black market, which has reached about LE37 as opposed to the official price of approximately LE31. Observers believe that gold retailers are pricing their products based on a dollar price of more than LE40.
Many consumers have rushed to buy gold with their savings, and some have even sold assets to buy more gold.
Sara Gamal, an intended buyer of gold, said the unprecedented rises in gold prices had led her to cancel her asset-buying plans. “I cancelled my plan to buy an apartment as a long-term investment in favour of buying gold,” Gamal said, adding that she believes that prices will continue to rise.
Egypt’s Division of Gold and Jewellery at the Federation of Chambers of Commerce held a press conference on Sunday, during which it announced the launch of a three-axis initiative to control the sharp rise in the prices of gold.
Hani Milad, head of the division, said that the first axis would work on reducing the price of the workmanship of gold artifacts for consumers in cooperation with factories and gold retail stores.
The second axis would see a report submitted to the minister of supply, which would then be submitted to the prime minister, in order to allow expatriates and returnees from abroad to enter with gold in a way similar to the existing dollar permit system (up to $10,000).
This would provide new gold products on the market without the need for dollar liquidity to import them.
Milad said the third axis of the initiative would include awareness campaigns among gold retailers and consumers in cooperation with the Ministries of Supply and Internal Trade and Trade and Industry and the Stamp and Scales and Consumer Protection Agencies.
This would familiarise retailers with the rules on price discounts in accordance with proper procedures and legal rules.
* A version of this article appears in print in the 4 May, 2023 edition of Al-Ahram Weekly