Gold Falls 0.5% in Egypt Versus 2.5% Globally Over the Week as Local Demand and Stronger Dollar Cushion Losses

Gold prices in the Egyptian market declined by 0.5% over the past week, while the global gold price fell by 2.5%, as the international market came under pressure from a stronger U.S. dollar and higher U.S. Treasury yields, prompting widespread profit-taking.

The price of 21-karat gold fell by approximately EGP 30 during the week, opening at EGP 5,850 per gram and closing at around EGP 5,820.

Meanwhile, 24-karat gold ended the week at approximately EGP 6,651 per gram, 18-karat gold at EGP 4,989 per gram, and the gold sovereign at around EGP 46,560.

Globally, gold lost approximately $103 per ounce over the week, falling from an opening level of $4,120 to close at around $4,017, marking its steepest weekly decline since early June.

Jewellery sales improved during the week as Egyptians living abroad began returning home for the summer holidays, a period that traditionally supports demand for gold jewellery, with many buyers favoring designs that reflect Egyptian craftsmanship and style.

Despite the sharp decline in international prices, the Egyptian gold market remained relatively resilient. Local prices fell at a much slower pace than the global market, supported by the appreciation of the U.S. dollar against the Egyptian pound and continued demand for both gold bars and jewellery.

The local premium increased from around EGP 101 to EGP 110 per gram, reflecting the strength of domestic demand. At the same time, the stronger dollar offset part of the decline in global gold prices, limiting the weekly fall in Egypt to just 0.5%, compared with 2.5% internationally.

The recovery in local demand has coincided with a sharp increase in Egypt's gold imports during the first months of the year. However, the rise in imports cannot be explained solely by stronger domestic consumption, as exports have also expanded over the same period.

The simultaneous growth in imports and exports reflects increased activity across the gold sector. Imports help meet part of the market's demand for raw gold, while exports enable companies to generate liquidity that can be reinvested in purchasing raw materials and financing production and trading activities.

This suggests that the Egyptian gold market remains active, with renewed demand for jewellery alongside continued investment demand for gold bars.

Ongoing Global Pressures

Gold remained under significant pressure throughout the week as the U.S. dollar and Treasury yields continued to rise. At the same time, growing concerns over persistent inflation, driven partly by higher energy prices, strengthened expectations that the U.S. Federal Reserve could maintain a restrictive monetary policy for longer.

Markets are now closely watching upcoming U.S. economic data, particularly inflation and labor market indicators, as these will play a key role in shaping Federal Reserve policy and, consequently, the direction of global gold prices.

Global Institutions: Recent Decline Does Not Change the Long-Term Outlook

Several international financial institutions believe the recent decline represents a normal price correction following gold's record highs, while maintaining differing views on the pace of any recovery during the second half of the year.

The World Gold Council continues to view central bank purchases and persistent global economic uncertainty as key long-term support factors for gold.

Major financial institutions, including HSBC, BMO, ING, and Deutsche Bank, also continue to expect a gradual recovery in gold prices over the medium term, although they differ in their forecasts regarding the timing and speed of that recovery, given ongoing uncertainty surrounding U.S. interest rate policy.

Recommendations for Gold Buyers

Investors seeking to buy gold for long-term savings should avoid making decisions based solely on daily or weekly price movements, as the market is currently experiencing normal short-term volatility.

A phased purchasing strategy remains the most appropriate approach under current market conditions. Likewise, investors are advised not to rush into selling gold during temporary price corrections if their primary objective is wealth preservation.

Buyers should also purchase gold only from reputable dealers, obtain a tax invoice, verify the official hallmark, and compare manufacturing charges among different retailers before making a purchase.

Market Outlook

The performance of the Egyptian market over the past week reflects continued strength in demand for both gold bars and jewellery, together with the supportive impact of the stronger U.S. dollar, which prevented the full decline in global gold prices from being passed on to local prices.

Looking ahead, movements in Egypt's gold market are expected to remain closely linked to international gold prices, the exchange rate of the U.S. dollar against the Egyptian pound, and domestic supply and demand dynamics, as markets continue to navigate volatility while awaiting new U.S. inflation data and future Federal Reserve policy decisions.