Mamdouh Abdullah, a member of the Board of Directors of the Gold and Precious Metals Division in the Federation of Industries, said that the production of gold works in the current period within the markets ranges from zero to 3%, and the demand is directed at bullion and gold pounds.
He added that the past period witnessed “systematic rumors” to profit and create confusion in the market, including the rumor of the rise in gold prices during the coming period with the devaluation of the pound, which prompted citizens to buy gold to save the value of their money from fears of currency erosion.
As a result, the markets were exposed to a shortage in the supply of crude, with difficulties in importing to cover the demand, and consequently, the prices rose.
Abdullah pointed out that prices reached levels of about EGP 1,300 for 21-karat, which are exaggerated and unreasonable prices that exceeded even the factor of supply and demand.
He explained that the bad economic conditions in the whole world will have repercussions on all different markets. It is expected that the gold markets will witness a state of instability as a result of the impact of the yellow metal on geopolitical events, which may push it to sharp price fluctuation until the end of this year.
He said that the decline in the production of goldsmiths factories will have many repercussions on the sector, as a result of companies bearing the burden of labor expenses two months ago without the presence of production operations, which may prompt the company to dispense part of the labor during the current crisis, and “Kirmena” company granted workers an open leave until it occurs on running requests.
He added that the state should intervene to facilitate the import of gold ore from abroad, while removing obstacles for companies to export, including canceling appraisal fees on the export of goldware, which limits companies’ exposure to stumbling in similar crises.
Abdullah explained that canceling the duties on exporting gold jewelry, estimated at 1%, will have great benefits on the local economy, and the positive returns will be in the interest of the state before manufacturers, due to the increase in the rates of local manufacturing and export and the provision of hard currency.
He said the abolition of the appraisal fee will open new markets for manufacturers, and give them an opportunity to compete in foreign markets, thus increasing the volume of production and the volume of employment within the market.
Abdullah added that the companies’ tendency to export would enhance their productivity in the event of a decline in demand in the local markets, especially with the decline in the volume of Egyptian purchases and the trend for lightweights, as a result of the decline in purchasing power and the rise in gold prices to historical levels that the market has not witnessed before.
He mentioned that gold companies will not be able to reduce weights again as a result of the high cost of production and the increase in the manufacturing period, and thus the high price of workmanship, and the companies have no choice but to go to foreign markets to compensate for the decline in the volume of demand in local markets.
Contributed by Israa Farhan