Egypt’s gold market recorded mixed price movements last week, with the price of 21-karat gold, the most widely traded in the domestic market, rising by 0.5%, or EGP 30, to EGP 6,280 per gram at the close of trading, compared with around EGP 6,250 at the start of the week. The increase came despite a 4.1% decline in the international gold price per ounce, according to the Gold and Precious Metals Division of the Egyptian Federation of Industries (EFI).
In a statement issued on Sunday, the division attributed the resilience of domestic gold prices to the rise in the US dollar exchange rate against the Egyptian pound, which helped offset part of the impact of falling international prices. Gold prices in Egypt are influenced by both the global ounce price and the exchange rate.
The statement noted that 21-karat gold attempted to break above the EGP 6,300 resistance level last week but failed to sustain gains amid insufficient upward momentum, subsequently falling back below that threshold as the market sought to establish a new trend.
Ehab Wassef, head of the division, said the rise in the dollar exchange rate was a key factor supporting domestic gold prices despite the sharp decline in international prices, explaining that exchange-rate movements directly affect gold costs in Egypt alongside changes in global markets.
He added that the dollar exchange rate rose by 3.2% last week, gaining around EGP 1.7, surpassing EGP 55 and reaching a record high for the official rate at banks. This supported domestic gold prices and limited the extent to which the international decline was reflected in the local market.
Wassef said exchange-rate pressures came amid several economic developments, including a rise in crude oil prices to more than $117 per barrel, their highest level in over five months. Higher oil prices increase energy import costs and place additional pressure on the import bill.
He also cited higher shipping costs amid geopolitical tensions in the Middle East as a factor driving up import expenses. Meanwhile, investment outflows from Egypt’s debt markets generated net sales of around $1.83bn over four days, according to the statement’s data, boosting demand for dollars and adding to pressure on the Egyptian pound.
These developments affected the domestic gold market, Wassef said, with the stronger dollar offsetting part of the impact of lower international prices and causing local gold prices to move in the opposite direction to global markets.
Global gold prices fall below $4,000
On international markets, gold fell by 4.1% over the week, reaching a low of $3,975 per ounce before closing at $3,995, down from an opening level of $4,167.
Wassef said international gold prices had broken out of a sideways trading range that had lasted around four weeks after falling below the $4,100-per-ounce support level. Prices continued to decline towards the psychological $4,000 threshold, closing slightly below it.
He attributed the decline to mounting concerns over global inflation following the sharp rise in oil prices, alongside expectations that central banks would maintain tight monetary policies and keep interest rates elevated for longer.
Such expectations weigh on gold’s appeal because the metal does not generate regular income for holders, making interest-bearing assets relatively more attractive in a high-interest-rate environment, he explained.
Wassef also pointed to a wave of selling in technology shares. However, gold failed to benefit from the shift towards safe-haven assets, as some investors sold the metal to raise liquidity and offset losses in equity markets.
Dollar exchange rate to remain key domestic driver
Wassef said the direction of domestic gold prices in the coming period would depend on developments in both the international ounce price and the dollar exchange rate. Diverging movements in these two factors could cause prices in Egypt to move differently from those on international exchanges.
He concluded that, with 21-karat gold trading below EGP 6,300 per gram, movements in the exchange rate and key price levels would remain important indicators of the domestic market’s direction amid external pressures linked to energy prices, inflation and global monetary policy.
