Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Egypt's Gold Market on Edge as Customs Exemption Decision Looms

Gold Prices

Thu 09 May 2024 | 11:31 PM
Waleed Farouk

Egypt's local gold markets are currently in a state of anticipation as the government nears a crucial decision on whether to extend the customs duty exemption for gold brought by Egyptians returning from abroad. This exemption, set to expire tomorrow, May 10, 2024, has significantly influenced the local gold prices and enhanced the national reserves, especially amidst a cessation of imports for commercial entities.

Ahmed Fahim, an economic expert specializing in gold markets, noted that the exemption has been instrumental in stabilizing gold prices within Egypt and has enriched the national stockpile. This policy has been particularly beneficial in light of Egypt’s decision to halt gold imports, which has allowed returning citizens to take advantage of lower international gold prices compared to the higher rates within Egypt.

Local gold prices have risen approximately 200 to 500 Egyptian pounds above international levels due to restricted supplies of raw gold and increased demand for investment-grade gold, as citizens seek to hedge against the weakening local currency.

The industry is poised for the government's upcoming decision, which could either extend the initiative or end it, potentially leading to increased control over pricing by raw gold traders and subsequent market volatility.

Saeid Embabi, the executive director of the "iSagha" online platform for gold and jewelry, questioned the initiative's impact on the local markets, stating that despite its intention to balance supply and demand, gold prices soared to record highs during its implementation period. In January last year, gold prices in Egypt reached unprecedented levels, with 21-carat gold touching 4100 EGP per gram and 24-carat gold reaching 4690 EGP per gram.

Embabi criticized the use of supply-demand balance as a pretext for price hikes, especially in the absence of real data monitoring the market's demand and supply dynamics. He also pointed out that the initiative had led to significant dollar revenue losses for the Egyptian government, as expatriates converted their savings from dollars into gold, impacting Egypt's foreign currency reserves.