Rumors of Dollar Price Hike Disrupt Gold Markets

Gold prices in Egypt's local markets experienced a decline during Saturday’s trading session, coinciding with the global market’s weekend closure. This drop follows a 0.8% decrease in global gold prices at the end of the week, triggered by the Bank of Japan's unexpected decision to raise interest rates, ending a long period of negative rates. The move led to a significant sell-off of assets in global markets as investors adjusted their financial positions in response.

Saeed Imbabi, CEO of the "iSagha" online platform for gold and jewelry trading, reported that local gold prices fell by EGP 10 during Saturday's trading, compared to Friday's closing prices. The price of 21-karat gold dropped to EGP 3,450 per gram, while the price of gold per ounce closed the week at $2,431, marking a weekly decline of $12, or 0.8%.

Imbabi further noted that 24-karat gold was priced at EGP 3,943 per gram, 18-karat gold at EGP 2,953 per gram, and 14-karat gold at EGP 2,300 per gram. Additionally, the price of the gold pound reached EGP 27,600.

On Friday, local gold prices surged by around EGP 45. The 21-karat gold opened at EGP 3,415 per gram, reached a high of EGP 3,500, and closed at EGP 3,460. Meanwhile, global gold prices increased by $7, with the ounce rising from $2,424 to $2,431.

Imbabi explained that recent days have seen speculative pricing in the gold market, driven by widespread rumors of a possible increase in the dollar exchange rate in the local market. This speculation created a gap of nearly EGP 100 between local and global gold prices, with a similar EGP 100 difference between buying and selling prices.

He added that by the end of Friday’s trading, the gold market faced erratic pricing, with some retailers selling gold at prices as high as EGP 3,500 per gram. Imbaby emphasized that the impact of a rising dollar on local gold prices is more significant than changes in global gold prices. He noted that even a 10-piaster increase in the dollar’s value could raise gold prices by approximately EGP 5.

Imbabi also highlighted that global markets are facing one of the most significant crises in recent years, triggered by the Bank of Japan’s interest rate hike and growing fears of an economic recession in the United States. These concerns have led to widespread sell-offs in various assets, including gold.

Moreover, Imbabi pointed out that recent U.S. labor market data has bolstered expectations that the Federal Reserve may lower interest rates. The data revealed a substantial drop in jobless claims, the largest in nearly a year, indicating that the labor market remains strong despite a moderate economic slowdown.