(MENAFN- Daily News Egypt)
Local Gold prices experienced a significant surge last week, driven by multiple factors. The exchange rate of the dollar against the Egyptian pound in official banks increased, and global gold movements also played a role. However, this surge led to confusion in the gold pricing process, resulting in a temporary halt.
The widely traded 21-karat gold closed last week at EGP 3,475 per gram, up from the initial EGP 3,325 per gram-a 4.5% increase or EGP 150 per gram.
During the same period, gold prices in Egypt surpassed key levels, reaching EGP 3,350 per gram and subsequently EGP 3,400 per gram. The next target is EGP 3,500 per gram.
Egyptian gold prices surge 4.5% in a week
The rise in local gold prices was triggered by an increase in the dollar exchange rate in official banks, reaching its highest level since the exchange rate float in March. The rate stabilized above EGP 49 per dollar.
One contributing factor was the shift of investments away from local government bond markets toward high-credit-rated U.S. government bonds. This move put pressure on the dollar, affecting the local gold pricing process.
To stabilize the gold market and balance supply and demand, the Gold, Jewellery, and Precious Metals Division of the Chamber of Mineral Industries of the Federation of Egyptian Industries called for the reinstatement of the initiative to exempt gold from customs. Approximately 4 tonnes of gold were brought in by Egyptians returning from abroad, aiding in price stability.
The Egyptian Prime Minister clarified that the recent outflow of“hot money” represented only 8% of the total funds that entered Egypt after the exchange rate was liberalized in March. Foreign investments in Egyptian bonds and debt instruments exceeded $34bn in April.
Despite global gold prices recovering, they closed the week lower due to open market sales of financial assets. Investors now await U.S. inflation data, which will influence the U.S. Federal Reserve's next move.
The global gold ounce price ended the week above $2,425 per ounce, solidifying an upward trend. Having reached its initial target of $2,440 per ounce, gold aims for its historical peak at $2,483 per ounce. Breaking through this level could pave the way to $2,500 per ounce.
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