Gold prices have increased significantly since the beginning of January due to the higher exchange rate and the great demand, so that the price of 21 karat gold, the most widely used, hiked from EGP 1,675 per gram to EGP 1,730 on 30 January, a rise of about 1.5%, according to Gold Bullion.
The report said that this increase coincided with the appreciation of the dollar against Egyptian pound at the beginning of January, from EGP 24 to EGP 30.10.
Gold recorded the highest price in January, when 21 karat gold reached the level of EGP 1,900 per gram, before it declined again with the calming of individuals’ concerns, according to the Gold Bullion report to monitor the movement of gold.
Further, the report highlighted that high-yield bank certificates (the 25% yield certificates) contributed to withdrawing liquidity from gold within the local market, so that gold declined during January, from the level of EGP 1,900 for 21 karat, and this appeared clearly after the banks announced the amounts collected from the certificates.
Investors are awaiting the decisions of the US Federal Reserve and global gold price movements to determine the course of gold prices during the coming period.
As for the global gold market, gold prices ended January, the third consecutive month of gains, as gold closed trading on 31 January at the level of $1, 928, thus prices have spiked by approximately 20% from their lowest levels in two years, which they witnessed in November.
“Gold has so far appreciated nearly $100 in the first month of 2023, the best start to the year for gold since 2012, the report read. “The renewed momentum for gold comes as bond yields continue to decline and the US dollar continues to trade at its lowest level in seven months. In addition, interest rates continue to weigh on the dollar, which continues to swing at its lowest point in seven months at 102 points, which supports the upward momentum of gold as it becomes cheaper for buyers of other currencies.”
The report explained that gold finds demand by traders and investors who witness an improvement in expectations, as selling pressures in the past year have shifted, from raising interest rates to higher yields and the dollar, to support for gold, with interest rate hikes eventually halting while yields and the dollar decline amid concerns about the economic outlook.
Gold is still in a swing, securing six straight weekly gains, and could rally if the underlying economic drivers remain unchanged, the Gold Bullion expected. Further dollar weakness and weak US economic data could increase appetite for gold over the next few days.
“One of the factors holding back the gold market is that demand for gold-backed exchange-traded funds remains weak, as we have yet to witness a recovery in demand for exchange-traded funds with total holdings still close to a two-year low around 94 million ounce,” Gold Bullion disclosed. “On the other hand, gold prices found some selling pressure due to the Russian-Ukrainian war, as Russia has huge reserves of gold that Russia seeks to use to continue spending on the war, which led to an increase in the supply of gold in the global markets.”