Egyptian gold manufacturers move to raise making charges by EGP 60 starting June as retailers reject increases

Gold manufacturing companies in Egypt are moving toward raising making charges on gold jewelry beginning next June, despite the relative slowdown in the local market and weakening consumer purchasing power. Expected increases range between EGP 30 for 21-karat jewelry and EGP 60 for 18-karat products, according to a report issued by the Marsad Al Dahab for Economic Studies.

The increases come at a time when 21-karat gold prices are trading between EGP 6,800 and EGP 6,815 per gram in the local market, making labor charges equivalent to around 5% of the gram price, compared to 11.4% in 1998. This means that although making charges have risen in absolute value, their relative burden on consumers has fallen by nearly half over the past quarter-century.

Strong opposition from retailers

Retailers have expressed broad rejection of the new increases amid declining sales activity and weakening purchasing power. Traders believe customers are no longer willing to accept current making charge levels, especially alongside the recent relative decline in gold prices, which threatens to further slow market activity.

World Gold Council data confirms this slowdown, showing that demand for gold jewelry in Egypt declined by 19% to 5.2 tons during the first quarter of 2026 compared to the same period last year.

In contrast, demand for gold bars and coins in Egypt reached 5.7 tons during the first quarter of 2026. Although this represented a 23% decline from the fourth quarter of 2025, when demand reached 7.4 tons, it still marked a 22% year-on-year increase compared to 4.7 tons in the first quarter of 2025, reflecting the continued shift among savers toward investment gold at the expense of jewelry.

This trend is not limited to Egypt. Global jewelry demand fell by 23% during the first quarter of 2026 to 300 tons — the lowest level since the second quarter of 2020 — while spending on jewelry rose by 31% due to higher prices, meaning consumers are paying more for smaller quantities.

Average making charges for locally manufactured jewelry currently range between EGP 350 and EGP 400 per gram, while imported jewelry carries charges between EGP 800 and EGP 1,000 per gram, pushing a growing segment of savers toward gold bars as a lower-cost alternative.

Some retailers have also shifted their focus toward selling second-hand gold jewelry because of its lower production charges and relatively stronger demand compared to newly manufactured products. Several traders have called on manufacturers to reverse the planned increases in order to revive consumer demand for jewelry and reduce the growing reliance on bullion products.

Reasons behind the increase: fuel, dollar, and production losses

The market is facing these pressures amid a historic rally in global gold prices, with the ounce reaching $5,626 in January 2026 — the highest level in history — before retreating and stabilizing around $4,500. This directly increased manufacturing costs through the higher value of gold lost during production.

The report explained that rising gold prices globally and locally increase manufacturing costs because of the higher value of production losses, known in the industry as “wastage.” Production losses range between 3 and 5 grams per kilogram depending on the type of jewelry, directly affecting making charges.

On the energy front, Egypt’s Fuel Pricing Committee approved increases ranging between EGP 3 and EGP 3.5 per liter in March 2026, adding further burdens to operating, transportation, and production costs.

At the same time, the rise in the U.S. dollar exchange rate from EGP 48 to EGP 53 contributed to higher costs for production inputs and wages, prompting manufacturers to reprice products.

Making charges are determined by several factors, including production costs, wastage rates, manufacturer and retailer profit margins, as well as the type of product and manufacturing method. Handmade and highly detailed designs typically carry higher charges than machine-made jewelry. Charges for 18-karat gold are also higher than those for 21-karat gold due to greater hardness and higher wastage during manufacturing.

Consecutive waves of increases

Making charges have already gone through successive rounds of increases. Last November, charges rose by 35%, pushing average 21-karat making charges to between EGP 150 and EGP 200 per gram, compared to EGP 120–140 previously, while 18-karat charges climbed to EGP 300–350. This was followed by another increase of 15–20% in January 2025, adding more pressure on consumers and retailers alike.

Imported jewelry, particularly Italian gold, remains the most expensive category in terms of making charges due to high customs duties and taxes, followed by premium investment jewelry, while lower-cost popular jewelry products remain at the bottom of the scale.

VAT pressures expected in July

Markets are also preparing for additional pressure from a planned 10% increase in value-added tax beginning next July, according to the protocol signed between the General Gold Division and the Egyptian Tax Authority. The increase is expected to add another burden to final jewelry prices.

Making charges over time: from EGP 3 to EGP 400

Historical data reveal a dramatic rise in making charges over the decades. In 1998, the average making charge for one gram of 21-karat gold was around EGP 3.35 while the gold price stood at EGP 29.30 per gram, representing 11.4% of the gold value. By 2018, the average making charge had risen to EGP 33 with gold at EGP 627 per gram. Today, making charges range between EGP 350 and EGP 400 per gram, equivalent to around 5% of the gold price.

The report stressed that making charges do not simply represent retailer profits, as many consumers believe. Instead, they are distributed across production costs, wages, profit margins, and wastage costs, varying from one piece to another depending on design complexity and craftsmanship. Hollow or geometrically intricate jewelry pieces typically carry higher charges than traditional products.

The report concluded that the market currently faces a difficult equation: manufacturers are dealing with genuine cost increases that cannot be ignored, while consumers are struggling under mounting financial pressures that are discouraging purchases or pushing buyers toward lower-cost alternatives such as gold bars and second-hand jewelry.

It added that if this trend continues without a compromise between manufacturers and retailers, the decline in jewelry demand could deepen further, potentially reshaping Egypt’s gold market in favor of investment bullion — a structural shift that could permanently alter the nature of the local market.