Local gold prices saw a significant decline last week due to a gradual decrease in the dollar exchange rate at official banks and the near disappearance of the parallel market. Positive developments in the government’s dollar liquidity have also contributed to market stability and fairer gold pricing, as reported by the Gold Bullion Report.
On Saturday, the price for the commonly traded 21k gold opened at EGP 2,950 per gram. Over the week, there was a notable decrease of EGP 320, or 9.8%, with the closing price also at EGP 2,950 per gram, down from the opening price of EGP 3,270 per gram.
The exchange rate has stabilized recently, and the dollar price in banks has gradually declined due to the fading parallel market. This has brought a sense of calm to gold transactions, despite ongoing hedging in pricing.
At the onset of Ramadan, local gold experienced a dip in demand, which is expected to persist until mid-month. However, demand is anticipated to rise again before the holiday season.
Confidence in dollar liquidity is gradually returning to local markets following the investment deal in Ras El Hekma and Egypt securing a first tranche of $1.5bn from the International Monetary Fund. An agreement with the European Union for an $8bn financing package has also been reached.
Banks have responded by increasing international transaction limits on credit cards and releasing $3bn worth of goods that had been backlogged in customs. Plans are underway to settle the dues of foreign partners.
Moody’s Ratings has upgraded Egypt’s outlook from negative to positive, setting the stage for a potential credit rating increase.
These factors have collectively boosted confidence in the local markets, stabilized the Egyptian economy, and introduced substantial dollar liquidity. This influx has helped ease the situation, leading to a steady decline in the dollar exchange rate at official banks from its peak, which, in turn, has resulted in lower gold prices last week.