Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Sharp Decline in Gold Prices, Losing 590 EGP per Gram This Week

Gold Prices

Sat 24 Feb 2024 | 03:58 PM
Waleed Farouk

In a dramatic turn of events, gold prices in Egypt's local markets experienced a steep decline during this week's trading, particularly noticeable on Saturday. This downturn follows closely on the heels of the government's revelation of a landmark development project for "Ras Al-Hikma" city, in collaboration with the United Arab Emirates.

Saeed Embabi, Executive Director of the "iSagha" online platform for gold and jewelry trading, reported that the market has been in a sharp decline since the week commenced on Monday. The price for a gram of 21-karat gold plummeted by about 590 EGP, with a significant portion of this drop, 220 EGP, occurring at the start of Saturday's trading. This brings the current price of a 21-karat gold gram down to 2980 EGP, coinciding with the global exchange market's weekend break, which closed the week at an ounce price of 2035 USD.

Embabi attributed the fall in gold prices to a dip in the dollar's value on the parallel market, exacerbated by a statement from the Prime Minister's Office last Thursday. The statement announced the completion of the "Ras Al-Hikma" deal, anticipated to inject substantial dollar liquidity into the market. This influx is expected to bolster the state's efforts to dismantle the parallel market and satisfy the import demand for food commodities.

Prime Minister Dr. Mostafa Madbouly heralded the deal as the largest in the history of Egypt's direct investments, valued at an impressive 35 billion USD. This includes 24 billion USD in cash from the UAE and an additional 11 billion USD in Emirati deposits at the Central Bank, earmarked for conversion into investments.

Embabi further detailed that the price for 24-karat gold stood at 3406 EGP per gram, 18-karat at 2554 EGP, 14-karat at 1987 EGP, and the gold pound (an Egyptian unit of gold weight) at 23840 EGP.

In contrast, global gold prices on the exchange market saw a 1.1% increase, or a 22 USD rise, over the past week, ending on a high note on Friday. This uptick was fueled by comments from U.S. Federal Reserve officials, which heightened anticipation of a potential interest rate reduction.

On the local front, gold prices had already seen a decline of approximately 225 EGP in Friday's trading, with the 21-karat gold opening at 3425 EGP per gram and closing at 3200 EGP. The ounce price also saw a rise of 13 USD, opening at 2022 USD and closing at 2035 USD.

Embabi underscored the importance for Egyptians to retain their gold holdings and avoid selling during this price dip, noting that such fluctuations are often temporary and do not necessarily indicate a market collapse. He pointed out that the continued flow of dollars into the market is the sole indicator of the crisis's resolution. The significant value of the "Ras Al-Hikma" deal could provide temporary market stability, especially considering that dollar-denominated debts constitute over two-thirds of the country's external debt, according to the Central Bank of Egypt. Egypt is poised to repay about 32.8 billion USD, roughly 20% of its total external debt, in medium to long-term dues this year.

Embabi highlighted the continued relevance of gold as a safe haven asset, advising citizens to sell only in dire need of liquidity and to avoid being manipulated by market forces. He also suggested that the current price drop presents an opportune moment for potential buyers to invest in gold, recommending a phased approach to such investments.