Arab Finance: Gold prices in Egypt have continued their downward trend, coinciding with the drop in global gold prices.

As of 12:00 pm on June 4^th, the price of 21-karat gold, the most commonly traded in Egypt, stood at around EGP 3,100 per gram, while the global price per ounce reached $2,332.

Gold Price Decline in Egypt

This recent decline in local gold prices is attributed to the stability of the exchange rate of Egyptian pound against the US dollar, Head of the Jewelry and Gold Division of the Federation of Egyptian Chambers of Commerce Hany Milad told Arab Finance.

This stability followed the signing of the Ras El-Hekma agreement with the UAE, which pumped more foreign currency inflows into the Egyptian market, Milad explained.

The Egyptian gold market is closely tied to the global one, whether it rises, falls, or remains stable, Milad noted.

He added that the one of the primary factors that led to the recent drop in gold prices in Egypt was the reduced demand for gold. The hedging pattern for gold purchases has changed recently, contributing to a decrease in prices.

Gold Price Forecasts

Global gold prices are expected to increase in the upcoming time, particularly in the fourth quarter (Q4) of 2024, according to Milad.

This expectation coincides with predictions that the US Federal Reserve will raise interest rates in its September meeting, Milad said, expecting the Fed to keep interest rates unchanged.

This would contribute to keeping the precious metal’s price steady locally and globally, given the adverse relation between interest rates and gold prices, he added.

Moreover, Milad clarified that people tend to invest in gold as a safe haven when interest rates fall, which drives up its price.

For his part, gold expert Amir Rizk outlined global and domestic factors that drove down gold prices in Egypt. These factors include the duty-free gold import initiative, which increased the supply of gold in the local market and caused prices to drop significantly.

The exchange rate stability and the absence of the parallel market following the Ras El-Hikma deal and the International Monetary Fund’s (IMF) recent loan agreement are also among the key factors that impacted the decline in gold prices, Rizk pointed out.

These factors have injected billions of US dollars into Egypt’s foreign exchange market, boosting the supply of hard currency and stabilizing gold prices, he added, noting that the ounce of gold is priced in Egypt based on the official USD rate.

On June 4^th, the Central Bank of Egypt (CBE) reported a buying rate of EGP 47.21 and a selling rate of EGP 47 for the US dollar.

In March, the Egyptian government sealed its largest investment deal with the UAE’s Abu Dhabi Developmental Holding (ADQ) for the development of the Ras El Hekma project for a sum of $24 billion as a direct liquidity, in addition to $11 billion in deposits.

The CBE’s Monetary Policy Committee (MPC) maintained interest rates at its meeting on May 23^rd.

The overnight deposit rate and the overnight lending rate remained the same at 27.25% and 28.25%, respectively.

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