Egypt’s gold market witnessed a state of confusion following state-run banks’ offering saving certificates of 25%, namely Banque Misr and National Bank of Egypt (NBE), and the depreciation of Egyptian pound against dollar, besides the increase of gold prices on global stock exchanges. This prompted some gold traders to stop buying and selling until the market stabilises.
Saeed Embaby, CEO of iSagha.com, a platform for trading gold and jewellery, said that gold prices spiked in local markets during Wednesday trading, with the ounce reaching $1860, amid investors’ anticipation of the fate of interest rates during 2023.
Embaby noted that local market is witnessing confusion and a state of uncertainty, with some merchants suspending buying and selling operations, until the market stabilises, while gold prices in the local markets increased by EGP 15 during Wednesday trading, compared to the closing of trading on Tuesday, so that a gram of 21-carat gold recorded EGP 1,675.
He added that a gram of 24-carat gold recorded EGP 1,914, a gram of 18-carat registered EGP 1,436, a gram of 11-carat gold recorded EGP 1,117, and a gold pound reached EGP 13,400.
Embaby explained that every increase in dollar value by about one pound increases about EGP 50 in price of gold, pointing out that citizens have to diversify their investments between certificates and gold, to preserve value of their money amid the uncertainty that dominates markets.
Banque Misr and NBE offered savings certificates for a year, at an interest rate of 25%, to be spent at the end of the period, or at a rate of 22.5% to be spent monthly, in order to meet increasing inflation rates.
It is possible that banks will withdraw liquidity in markets and direct investors to bank certificates to benefit from the return. However, there are some disparate factors that may affect the markets, including that inflation may devour the expected increase, and therefore banks may not acquire a large share of it, especially since the current inflation is a result of an increase in cost, not an increase in money supply, nevertheless, the decline and volatility of local currency may push citizens to look for more safe investment havens, Embaby concluded.