Egypt’s gold mania result of traders’ speculation, not demand-driven: Pundits

Shaimaa Al-Aees
8 Min Read

Gold prices in Egypt witnessed unprecedented spikes several times after the Russian-Ukrainian crisis, reaching record-high levels. The price of a gram of 21-karat gold exceeded EGP1200 ($48.73) for the first time on 9 May, to exceed it on 15 December, recording the highest level in its history, which is EGP 1900 ($77.15).

Many Egyptians seek on a daily basis to know the prices of the precious metal, especially 21-karat gold. Handy charges prices differ and are changeable from one place to another. 

The prices differ depending on the goldsmiths’ shops, and also according to the shapes and weight of products, and the way they are formed. 

In Egypt, gold is a priority for all young men and women who plan ready to get married.

The handy charges in goldsmiths’ shops vary according to goldsmiths’ shops, from one governorate to another, and from one merchant to another. 

It often represents a percentage ranging between 5 and 10% of the price of a gram, and the higher percentage of minerals present, the less the karat. The ounce, which weighs 31.1 grams, is used as a unit of weight for jewellery and bullion.

Wael Shahboun, media officer at the General Division for Gold and Jewellery at the Federation of Egyptian Chambers of Commerce (FEDCOC) said that the problem began three months ago. 

An export movement of gold ore and bullion was monitored, unlike gold jewellery, which did not witness the same rate of demand for bullion and gold ore.

Shahboun elaborated that there has also been some speculation on gold prices as the domestic prices were not in line with their international peers.

Accordingly, he said that some hot money outflows were used to buy gold ore, withdraw it from the local market for the purpose of speculation, and offer it again in the market after the price hike. 

In addition, some exporters and importers who are not gold traders bought very large quantities of gold for export, and in return, they imported alternative consumer and durable commodities due to a shortage of dollar liquidity. 

All this caused a problem of demand and a shortage of supply, which increased significantly in the current period.

He elaborated that this situation led to the decision of the Central Bank of Egypt (CBE) to tighten control over the supply of gold export proceeds, which began to bear fruit, as it resulted in a slight decrease in the price of gold.

The CBE instructed banks that the proceeds of export operations related to gold must be received within a maximum period of 7 working days from the date of shipment. 

Before the new instructions, the CBE allowed a period of 180 days to supply the proceeds of gold export operations to the bank that arranged the export process.

Shahboun revealed that General Division for Gold and Jewellery is currently preparing an initiative to encourage traders to sell gold jewellery with less handy charges than to sell gold bullion to decrease the pressure of demand on gold ore, added that this initiative will be launched within days in cooperation with government authorities and CBE.

For his part, Hani Milad, Head of the General Division for Gold and Jewelry at the FEDCOC stated that the slowdown in the foreign investment rate, lack of dollar liquidity, as well as a shortage in production materials, which is gold ore that is imported or recycled from the local market are the most important issues that face Egypt’s gold market.

Milad noted that governmental regulatory agencies have begun to notice a lot about the presence of speculation in the local gold market, led by the Ministry of Supply and Internal Trade, Consumer Protection Agency and the authority for jewellery stamping and scales. Besides, the CBE began to realise the issue of speculations in gold export.

He further explained that some solutions and measures have been taken to stabilise and develop the local market, including the development and support of workshops for the production of gold jewellery. 

A committee was formed at the beginning of this month, in which all stakeholders are represented to produce products with low cost at high quality.

Besides, encouraging the export of gold jewellery, for example, through international exhibitions, as well as relieving pressure on gold ore and directing the demand for gold jewellery by relinquishing part of the processing cost. 

Furthermore, he suggested that authorities should continue monitoring gold ore export.

For his part, Saeed Embaby, CEO of, a platform for trading gold and jewellery via the Internet, said that local gold markets witnessed a state of pricing chaos in the middle of this month, after a wave of successive rises, while the ounce on global markets rose slightly to record $1783, due to expectations that the US Federal Reserve will continue to tighten monetary policy and raise interest rates over the next year.

Embaby explained that the price of gold is calculated according to international prices. 

“This depends on the exchange rate of the pound against the US dollar and the price of an ounce of gold in US dollars.”

He added that there is a third factor, which is supply and demand. The pricing havoc is the result of speculations by some traders and is not a true reflection of supply and demand in the market.

He elaborated, “Of course, there is a close link between the global and local prices, but rather it is the main determinant of pricing. However, the export restrictions made the price linked to the exchange rate, and supply and demand factors. 

“At a time when we witnessed an insane rise in gold prices, we halted displaying prices as well as selling operations, due to the severe disarray in the pricing of gold locally, which led to high-risk fluctuations in this important sector,” Embaby added.

He pointed out that the lack of dollar liquidity, and its circulation near its lowest levels in six months, was a major catalyst for the hikes in gold prices.

“Gold must be part of the investment portfolio of any investor at present to protect their money from inflationary pressures, which increases the investment demand for the precious metal. Besides, investing in gold is one of the best, easiest and safest ways to invest to avoid currency fluctuations,” Embaby concluded.

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