Gold Prices Surge in Egypt Amid Monetary Tightening Policies

By Mary Nady

Since March 2022, the price of gold in Egypt’s local market has surged by about 250%, while the price per ounce of gold in the world market has increased by 7.3%. The increase follows the Federal Reserve’s decision to implement monetary tightening to curb inflation. This includes 11 interest rate hikes in two years, with the highest reaching between 5.25% and 5.50%.

Saeed Embabi, CEO of the online gold jewelry trading platform “iSagha” noted that the price of gold has increased by approximately LE 2,088 since March 2022.

The price per gram of 21-carat gold opened at EGP 837 in early March, peaked at EGP 4,000 in January 2024, the highest price ever recorded locally, and closed at EGP 2,925 at the end of February 2024.

At the same time, the price per ounce in the global market increased by approximately US$140, opening at US$1,905 in March 2022, hitting an all-time high of US$2,152 in December 2023, and closing at US$2,045 at the end of February 2024.

Embabi explained that the Federal Reserve’s launch of a monetary tightening cycle and interest rate hikes had an impact on emerging markets, including Egypt, causing a massive outflow of hot money and prompting the Egyptian government to raise interest rates by 13% on March 21. 25%, 22.25%. or 21.75%.

Additionally, Egypt’s Central Bank decided to float the Egyptian pound twice, in March and October 2022, leading to a 57% devaluation of the pound in official banks, before floating it again in January 2023. This resulted in an unstable dollar exchange rate within two years, with the gap between the official rate and the parallel market rate widening by approximately 100%. The gold market has seen chaos and manipulation by some crude gold traders, prompting iSagha to suspend pricing multiple times to avoid depleting citizens’ savings.

In line with the state’s strategy to increase foreign currency through investment agreements, such as the “Ras El Hikma” deal, and the state’s partial or total withdrawal from economic activities to strengthen the role of the private sector and foreign investments, Embabi predicts a period of stability and decline in exchange rates and gold markets in the near future.

A gramme of 21-karat gold started at 4000 EGP, hit a low of 2880 EGP, and closed at 2925 EGP during the transactions in February, a 1075 EGP decline in gold prices. The price of an ounce of gold dropped by 11 USD on the international market, starting at 2056 USD, hitting highs of 2066 USD and lows of 2017 USD, and finishing at 2045 USD.

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