The price of the gold jumped by more than 92 per cent since the beginning of  2023, with Egyptian purchases rising at record rates. Ahmad Abdel-Rahman writes.

As a result of the turmoil in the Egyptian market because of the dollar crisis, gold attracted some money. It has reached record heights over the past year.

According to official statistics issued by the Central Bank of Egypt (CBE), since the beginning of last year, all gold bullion and pounds have jumped by 92.4 per cent. For example, the price of an 18-carat item has risen from EGP1,414 at the beginning of the year to about EGP2,721.

The price of a 21-carat item, which is the most traded carat in Egypt, jumped from EGP1,650 at the beginning of 2023 to about EGP3,175. The price of a 24-carat item also rose from EGP1,886 at the beginning of the year to about EGP3,629 in recent transactions. Finally, the gold pound (a coin pound made from gold) recorded an increase from the level of EGP13,200 at the beginning of 2023, to about EGP 28,400 now.

Globally, the price of an ounce of gold has increased by 14.3 per cent since the beginning of 2023 until now. It increased from USD1,810 at the end of 2022, to about USD 2,069 in recent trading.

Within the framework of controlling gold prices, the Egyptian Council of Ministers agreed last December to extend the implementation of Resolution No. 1801 of 2023 regarding granting a customs exemption for gold imports from the customs department for a period of 6 months until May 10, 2024.

Facilities for gold

The Council of Ministers explained that the decision to exempt gold in semi-finished forms prepared for personal use, such as jewelry, from customs tax and other fees, with the exception of value-added tax, would ensure gold imports have a positive impact in trying to control markets, restore stability, and balance to prices.

The toll of gold imported by Egyptians returning from abroad rose to about 2,000 kilograms of jewellry and bullion since May 2023 until September 2023.

The World Gold Council (WGC) said in a report that Egyptians' purchases of gold from last January to the end of last September 2023 increased by 87.2 per cent. Purchases jumped to about 24.9 tonnes during the first nine months of 2023, compared to about 13.3 tonnes during the same period in 2022.

The WGC, in its report, said that purchases of gold bullion and coins decreased to 6.3 tonnes during the third quarter of 2023, compared to 10.4 tonnes during the second quarter of 2023. This is a decline of 39.9 per cent. But the decrease was 4 per cent when compared to purchases in the third quarter of 2023.

Third quarter purchases

The volume of purchases in gold jewelry during the third quarter of 2023 also declined by 27 per cent compared to the same period in 2022, or about 6.6 tonnes. The WGC believes that the main reason behind the decline in Egyptian purchases of gold during the third quarter of 2023 is due to the continued weakness of the purchasing value of the local currency. This has caused extreme fluctuations in local gold prices in Egypt.

The WGC also said that imposing a value-added tax on small gold bullion up to 100 grams contributed to a decline in demand during the third and fourth quarters of last year. The WGC also stated that Egypt is the only market in the region that has witnessed a decline in demand for gold by less than the average of the last five years, estimated to be about 7 tonnes of gold.

Photo: In Egypt, purchases of gold have risen at record levels