Expert: Raising Fuel Prices to Increase Cost Of Gold Manufacturing

Saeed Imbaby, CEO of the "iSaaga" platform for online gold and jewelry trading, said that rising fuel prices will consequently lead to higher manufacturing costs per gram of gold, as the calculation of manufacturing costs depends on both the manufacturing and commercial aspects.

He added that the manufacturing aspect is affected by the inputs of the production process, including the cost of electricity and gas, the technology used in production, worker salaries, transportation and insurance costs, and manufacturers' profit margins.

He pointed out that the type of jewelry, the karat of gold, and the loss are also factors influencing the cost of manufacturing wages. The lower the karat of gold, the higher the manufacturing cost, due to the increased loss during manufacturing. Consequently, the higher the price of gold, the higher the value of the loss during the manufacturing process.

He continued, saying that the commercial aspect depends on the cost of rent, the salaries of gold shop workers, marketing, and merchant profit margins.

Last Friday, the Egyptian government decided to increase the prices of gasoline and petroleum products, the second increase in six months. This increase is part of its plan to completely lift fuel subsidies and liberalize fuel prices to international prices. This move is part of the government's economic reform program, in agreement with the International Monetary Fund. Meanwhile, gold prices in local markets rose by EGP 315 during last week's trading. A gram of 21-karat gold opened at EGP 4,350, touched EGP 4,710, and closed at EGP 4,665. Meanwhile, an ounce rose by $200, opening at $3,038 and reaching an all-time high of $3,248 on Friday, April 11. Trading ended at $3,238. A gram of 24-karat gold reached EGP 5,331, a gram of 18-karat gold reached EGP 3,999, a gram of 14-karat gold reached EGP 3,110, and a gram of gold reached EGP 37,320. The increases were driven by the escalating trade war between the United States and China and growing bets on a cut in US interest rates.