Egypt's Gold Market Faces Record-breaking Prices

Gold prices in Egypt rose by 11% quarter-on-quarter in March compared to the fourth quarter of last year, and by 30% year-on-year. 

This increase came after local gold prices in Egypt reached EGP 4,170 per gram of 21-karat gold, the most popular and widely traded in Egypt, compared to EGP 3,750 per gram last December and EGP 3,200 per gram in March 2024.

The increased supply of gold in Egypt is accompanied by a noticeable stagnation in the market, amid a continuous rise in prices, with expectations that the price of 21-k will reach EGP 4,500 per gram.

Nagi Farag, gold affairs advisor to the Minister of Supply attributed the rise in the local price of gold in Egypt to its global rise, believing it to be the main factor driving the price of the yellow metal in Egypt. He said that it is not a matter of supply and demand, as the supply of gold far exceeds demand.

Farag confirmed to Asharq that gold has become a key demand for central banks around the world as a secure hedging instrument. He expects its global price to exceed $3,100 per ounce during the first half of the year, increasing its local price in Egypt to approximately $4,300 per gram for the 21-karat gold, the most popular in Egypt, an increase of approximately 5% over its current price.

The advisor to the Minister of Supply also predicted that Egyptians' gold purchases will decline in 2025 compared to last year, when purchases amounted to approximately 50.1 tons of gold, according to statistics from the World Gold Council. He attributed this to the successive rise in gold prices this year.

Hani Milad, head of the Gold Division at the Federation of Chambers of Commerce told Asharq that gold sales in the local Egyptian market are "very weak," adding that gold purchases are currently "very limited," which is driving an increase in gold exports.

Milad also predicted that global gold prices would rise to $3,100 per ounce in the coming months, believing that a global gold price increase of this level would raise its local price by between EGP 250 and EGP 300, reaching approximately EGP 4,500 per gram of 21-karat gold.

Ehab Wassef, head of the Gold and Precious Metals Division at the Federation of Egyptian Industries, agreed with them, noting that the domestic supply of gold in Egypt exceeds demand. However, prices are rising due to investor fears abroad and uncertainty about the currency's economic future, which is driving them to seek safe havens for investment and increasing demand for gold.

Wassef explained that the uncertainty among foreign investors is due to US President Donald Trump's decisions to take certain economic measures, such as imposing tariffs on US imports from its major trading partners.

The head of the Gold Division said that Goldman Sachs has raised its forecast for the global gold price amid uncertainty caused by global conditions. He said that the threat of a ceasefire in the Russian-Ukrainian war could create a relative lull in global gold demand.

Goldman Sachs raised its forecast for the gold price at the end of this year to $3,100 per ounce, up from $2,890, citing continued demand from central banks.

The World Gold Council revealed that Egyptian gold purchases in 2024 reached 50.1 tons, a 12% decrease compared to Egyptian gold purchases in 2023.

Lotfi Mounib, Vice President of the Gold and Jewelry Division at the Federation of Egyptian Chambers of Commerce believes that the global and local price outlook remains murky, driven by the US President's uncontrolled and unpredictable statements. He explained that America's move to support the digital currency market increases the chances and probabilities of a rise in the price of gold.

The division's deputy head said that the possibility of a price increase is very real, but it is equally likely that prices will decline if the global military conflicts between Russia and Ukraine are resolved, a genuine settlement is reached in Gaza, and the situation in Syria is contained.