The Egyptian market witnessed a state of fluctuation over the past week, with gold prices maintaining their gains despite the sharp decline in the global stock market. The Gold and Precious Metals Division of the Federation of Egyptian Industries reported, in a report, that the price of a gram of 21 carat gold, the most traded in Egypt, rose by 0.5%, equivalent to 30 pounds, to close trading at 6,280 pounds, compared to 6,250 pounds at the beginning of the week, after reaching its highest level at 6,340 pounds per gram. During the week, the yellow metal tried to exceed the resistance level at 6,300 pounds per gram without succeeding in settling above it due to the lack of sufficient upward momentum, which prompted it to move below it in an attempt to form a new trend.
Ihab Wassef, Head of the Gold and Precious Metals Division, confirmed that the rise in the dollar exchange rate was the main factor in the stability of gold prices locally despite the decline of the ounce globally, due to the exchange rate being directly involved in determining the cost of gold alongside international prices. The dollar exchange rate rose last week by 3.2%, equivalent to about 1.7 pounds, exceeding the level of 55 pounds and recording its highest historical level in official banks.
Exchange rate movements were driven by several economic pressures. Most notably, the rise in crude oil prices to more than $117 per barrel (the highest level in more than 5 months), which increased the cost of energy imports and put pressure on the import bill. The rise in shipping costs as a result of geopolitical tensions in the Middle East, in addition to the exit of investment flows from the Egyptian debt markets with net sales amounting to about $1.83 billion within 4 days, also contributed to enhancing demand for the dollar and putting pressure on the pound. Wassef explained that these data limited the impact of the decline in the global ounce, which made the Egyptian market move in a direction different from the global trend.
Globally, an ounce of gold fell by 4.1% last week, reaching a low of $3,975, before closing at $3,995, compared to an opening price of $4,167. Wassef pointed out that global gold broke the horizontal trading range that had been ongoing for 4 weeks after falling below the support level at $4,100, continuing the decline towards the psychological level of $4,000 and closing below it by a limited margin.
These global movements were linked to the escalation of inflation fears resulting from the jump in oil prices, and the subsequent expectations that central banks would continue their strict monetary policies and keep interest rates high for a longer period, which are indicators that negatively affect the attractiveness of gold as an asset that does not generate a periodic return compared to high-yielding assets.
