Egyptian gold trades at a discount of about EGP 100 locally amid liquidity shortage and weak demand

Gold prices in the local market are trading at a discount of up to around EGP 100 compared to global prices, driven by declining demand and liquidity shortages.

According to Jack Raafat, a gold market expert, the current discount reflects several factors, most notably the slowdown in local demand and the shortage of liquidity in the market.

He explained that the price decline after gold reached record highs amid escalating geopolitical tensions prompted some consumers to sell gold holdings in anticipation of a possible further downturn, especially amid expectations that the Federal Reserve may maintain or raise interest rates for a longer period to combat inflationary pressures driven by rising energy prices.

Raafat added that heavy selling pressure contributed to reducing liquidity in the local market, alongside a slowdown in gold export operations, which had previously served as an important source of liquidity, particularly amid disruptions affecting some regional transport and trade routes.

He also noted that the rise of the US dollar in the domestic market, driven by the outflow of short-term investments, helped limit gold’s losses locally despite global price pressures.

Gold prices reached nearly EGP 7,600 per gram earlier this week before declining to around EGP 7,200 during today’s trading session.

He expects that the US dollar trading above the EGP 50 level would support gold prices in the local market if global prices undergo a corrective decline, while investors remain focused on US interest rate policy in the coming period.