Somaya Hassan has for many years been converting her savings to gold pounds and bullions. Whatever small amounts she managed to put together, every month Hassan would buy some gold. More recently, especially with the depreciation of the pound, many Egyptians have started doing the same to secure the value of their savings.

This rush in demand for gold pushed prices to peak, with the one gram of carat 21 selling for LE1,880 last week, an unprecedented hike. At one point gold trading was brought to a halt because it was exceeding the global price. Tarek Al-Hassan, a gold merchant, said the gold market had gone “insane” with prices changing twice in one hour.

Gold is a safe haven for investment for a large number of Egyptians, Nagi Farag, advisor to the minister of supply for gold manufacturing affairs, said. “I advise people who plan to buy gold to wait a bit more because its price will go down,” Farag said, adding that the current price is higher than gold’s real value.

Ehab Wassef, head of the Gold and Precious Metals Division, said that the price of gold has been fluctuating recently because people resort to gold to preserve the value of the pound. Wassef said that this week the price of gold began to decline because “some individuals are selling their gold to capitalise on its exaggerated price.”

Hani Milad, head of the General Division for Gold and Jewellery at the Federation of Chambers of Commerce, said that since the US Federal Reserve began raising interest rates this year, many investors worldwide sold their gold to invest in dollar bonds to benefit from the increased interest rate on the dollar, leading to a drop in the price of gold at the international level.

Demand for gold usually declines with the strengthening of the dollar which happens when the US Fed raises interest rates. Moreover, a stronger dollar means that other currencies become weaker, thus making gold more expensive and accordingly, demand for the metal drops, bringing its price down.

Because the market cannot meet all the demand, companies and leading vendors are putting higher price tags, Al-Hassan noted.

Moreover, the majority of prominent merchants set the price of gold based on the exchange rate of the dollar in the black market of around LE30 per dollar, as opposed to the official LE24.6 in banks, he added.

Due to the turbulence in the gold market, some companies, such as BTC Gold, announced they were freezing their activities until further notice to maintain transparency. BTC said the current prices of gold are not stable and the company cannot conduct its sales operation amid such fluctuations.

Al-Hassan expects gold prices to keep on rising, insisting this precious metal is a winning card.

Despite the increase in the price of gold, demand is still on the rise.

And Somaya Hassan intends to keep on buying it. She said that she knows all too well that her investments in gold – no matter its price – will yield her positive results.

*A version of this article appears in print in the 15 December, 2022 edition of Al-Ahram Weekly