Egyptian gold prices climbed 5.8% last week, reaching an 11-week high as global gold rallied and the Egyptian pound weakened against the US dollar. The move reflects both international market dynamics and shifting local demand.
Gold prices in Egypt rose sharply for the third consecutive week, driven by a combination of global market gains and renewed pressure on the Egyptian pound. According to Gold Bullion's technical analysis, the price of 21-karat gold increased by 5.8% last week, moving from EGP 6,250 per gram at the start of trading to EGP 6,630 by week's end. This marks a weekly gain of EGP 380 and the highest level for 21-karat gold in 11 weeks.
The rally saw gold break through several key resistance points, including EGP 6,300 and the psychological EGP 6,500 mark, before closing above EGP 6,600 per gram. The upward momentum was reinforced by a 1.3% rise in the US dollar exchange rate against the Egyptian pound, equivalent to a 65-piaster increase over the week.
Local Market Dynamics and Consumer Response
Despite the price surge, Gold Bullion noted that gold in Egypt traded at a discount to its fair value for much of the week. This was attributed to relatively subdued domestic demand and increased resale activity, as consumers sought to take advantage of higher prices by liquidating part of their holdings. The resulting boost in supply helped moderate the local premium, even as international prices climbed.
The Central Bank of Egypt maintained its key interest rates at 19% for deposits and 20% for lending, citing ongoing inflation risks and geopolitical uncertainty. Urban inflation in Egypt accelerated to 14.9% in July, up from 14.3% in June, adding further pressure on household purchasing power.
International Gold Rally and Outlook
Globally, gold prices advanced 5.2% over the week, with the price per ounce rising from $4,372 to $4,602 and reaching a weekly high of $4,632-the highest since May. The metal broke out of its previous $4,300-$4,400 trading range, surpassing the $4,500 and $4,600 levels, which analysts see as reinforcing the broader uptrend.
Market participants are closely watching the US Federal Reserve's upcoming policy decisions, with current expectations indicating a 65% probability that rates will remain unchanged at the September meeting. Gold Bullion suggests that the ability of Egypt's local market to sustain prices above EGP 6,600 per gram will be key to maintaining the current momentum. However, further gains will depend on continued international price strength and the stability of domestic demand.
On the global front, a sustained close above $4,600 per ounce would further strengthen the outlook for gold, with movements in the US dollar, bond yields, and US interest rate expectations remaining critical factors for the market in the coming period.
