How the War Triggered Liquidity Pressure in Egypt’s Gold Market

Gold markets in Egypt have recently experienced a sharp liquidity squeeze, pushing local prices to trade at a discount of nearly EGP 100 below global prices. The situation has been largely driven by the impact of regional conflict and restrictions on Gulf air traffic, which disrupted gold export flows.

Gold is widely regarded as one of the most liquid savings instruments, as it can be easily converted into cash compared with other assets such as real estate. This liquidity advantage has historically strengthened its role as a store of value for individuals and investors.

In the Egyptian market, exporting raw gold is a common mechanism used to manage liquidity, particularly during periods of weak domestic demand and declining sales. Export activity allows traders and manufacturers to generate cash flow, facilitating the repurchase of gold within the local market while also providing foreign currency inflows.

Gold exports are considered one of the key sources of foreign currency for Egypt. The government allows export proceeds to enter the banking system in U.S. dollars before being paid to exporters in Egyptian pounds, and the metal is exempt from customs duties.

However, restrictions on Gulf air travel due to the ongoing regional tensions have slowed the export of raw gold, limiting liquidity in the domestic market at a time when many citizens have been selling their holdings to capitalize on record price levels amid fears of possible price corrections.

From a regulatory standpoint, Ministry of Supply and Internal Trade (Egypt) imposed a 1% fee on raw gold exports in 2021, similar to the fee applied to finished gold jewelry.

Earlier, in October 2020, a proposal was submitted by Margier Gold Manufacturing and Jewelry suggesting a 2% fee on raw gold exports while exempting gold jewelry exports from customs duties and value-added tax in order to support manufacturing and encourage higher-value exports.

Following a slowdown in export activity, both the Central Bank of Egypt and Egyptian General Authority for Export and Import Control recommended abolishing the valuation fee on raw gold exports, arguing that it negatively affected foreign currency inflows.

The issue of the 1% valuation fee, stipulated under Article 9 of Law No. 68 of 1976, has also sparked legal and administrative debate, particularly after authorities discovered irregularities in how the fee had been applied in export procedures.

According to Abdullah Montaser, head of the Assay and Weights Authority, some employees responsible for collecting the valuation fees were referred to the Public Funds Prosecution after evidence emerged that the law had not been properly enforced since 2004.

Montaser explained that some exporters obtained inspection certificates for gold bullion without completing the valuation process, which allowed them to pay stamping fees while avoiding the valuation fee.

The authority has since compiled a record of all companies and quantities of raw gold exported between 2004 and 2020. Authorities are considering applying the law retroactively, starting from 2020 only, in order to avoid disrupting the market.

Under the law, exporters are required to pay inspection certificate fees and a valuation fee of approximately 1% of the gold’s value on both jewelry and bullion exported abroad.

Data from the Egyptian General Authority for Export and Import Control show that Egypt’s exports of gold and gemstones reached about $7 billion in 2025, with the United Arab Emirates accounting for the largest share of those exports.

In January 2026, Egypt’s Minister of Investment and Foreign Trade stated that the country exported nearly $6 billion worth of gold, around 97% of which consisted of raw gold, highlighting the rapid growth of the domestic gold sector and expanding investments in precious metals.