Gold Prices in Egypt
Gold prices in Egypt saw a moderate increase over the past week, driven by the global rise in gold ounce prices. However, local factors continue to temper the potential for a significant spike in gold prices, primarily due to weak local demand and the stable official exchange rate of the dollar.
On Saturday, 21-karat gold, the most commonly traded, opened at EGP 3,245 per gram and maintained that level. This followed a EGP 5 increase on Friday, closing at EGP 3,245 per gram (having opened the previous session at EGP 3,240 per gram).
Over the week, local 21-karat gold rose by 20 EGP, representing a 0.6% increase, closing at EGP 3,245 per gram after opening at EGP 3,225 per gram.
Factors Influencing Gold Prices
This increase was directly influenced by the global gold ounce price surge. However, fluctuations in the dollar-to-pound exchange rate persisted in official banks, with the average rate currently at EGP 48.05 per dollar.
Additionally, gold exports by traders have helped stabilize prices. Traders are compensating for weak local demand through exports, a situation that may persist until local demand rebounds.
IMF Loan Tranche and Investment Trends
Last week, the International Monetary Fund (IMF) postponed the discussion on disbursing Egypt’s third loan tranche, valued at $820m, to 29 July. The initial discussion was scheduled for tomorrow but was delayed due to unmet conditions, according to statements.
News also emerged that the IMF will review fees and interest rates imposed on major borrowers, including Egypt, amid concerns about high loan costs.
Furthermore, foreign direct investment in Egypt reached $23.7bn during the first nine months of the last fiscal year, covering the $17.1bn current account deficit for the first time. The Ras El Hikma deal’s first part, amounting to $15bn, contributed to non-petroleum sector investments.
Remittances and Government Growth Targets
Remittances from Egyptians abroad surged in May to $2.7bn, a 73.8% increase compared to May 2023 when they were only $1.6bn. This marks the third consecutive month of rising remittances since the exchange rate was liberalized and the parallel market was eliminated.
The Egyptian government’s program document, released last week, targets a 5.5% growth rate for the fiscal year 2026-2027. The current fiscal year (2024-2025) is projected to have a growth rate of 4.2%, following a decline of 2.8% in the previous fiscal year.
Inflation Rates and Economic Indicators
Meanwhile, inflation rates continued to decline in Egyptian cities in June for the fourth consecutive month. The Central Agency for Public Mobilization and Statistics reported an annual inflation rate of 27.5%, down from 28.1% in May.
Regarding the core consumer price index data, which excludes volatile factors and is issued by the Central Bank of Egypt, it showed an annual decline to 26.6% in June compared to 27.1% in May.
Insight: The increase in gold prices in Egypt reflects the interconnectedness of global and local factors on the market. While external forces like the global rise in gold ounce prices drive fluctuations, internal dynamics such as weak local demand and stable exchange rates play a crucial role in shaping the overall trajectory of gold prices in the country.
