Skip to main content

Egyptians hoard gold jewelry

The price of gold in Egypt has declined, amid growing demand for jewelry.
Visitors look at displayed ancient jewelry at the new National Museum of Egyptian Civilization, during its official reopening in the Fustat district of Old Cairo, Egypt, April 4, 2021.

Gold prices in Egyptian markets dropped recently, with the price of a 21-karat gram, the most popular in Cairo, hitting about 776 Egyptian pounds ($49.45), compared to 794 Egyptian pounds (about $50.60) at the end of July. 

An 18-karat gram is sold at about 665 Egyptian pounds ($42.40), and a 24-karat gram at about 887 Egyptian pounds ($56.50). A sovereign of gold — equivalent to 8 grams — is now sold at 6,208 Egyptian pounds ($395.60), after dropping by 144 Egyptian pounds ($9.20) since the beginning of August.

Nadi Naguib, secretary-general of the Gold Division at the Cairo Chamber of Commerce, told Al-Monitor that the price of a gram of gold decreased by 18 Egyptian pounds ($1.15) in one go. He attributed this to the rise in dollar prices globally, with the release of the latest jobs report in the United States.

This comes amid a global dip in prices, with gold dropping to a four month low of $1,677.90 per ounce on Aug. 8. As of Aug. 13, the price had slightly increased to $1,773 per ounce.

Naguib explained, “Determining the price of precious metal in Cairo is based on several factors, foremost of which is the exchange rate of the US dollar against the Egyptian pound in banks, especially in the Central Bank, in addition to gold prices on the international stock exchanges.”

Instability has prevailed on the Egyptian gold market for nearly two years, specifically with the outbreak of the coronavirus pandemic. Gold jewelry dealers endured major losses, which prompted them to demand the Egyptian government to reduce fees, taxes and stamps imposed on them.

In 2020, the gold market witnessed a qualitative leap, especially in the first half of 2020; gold prices in Egypt witnessed an increase of 17.2%, as the price of a 21-karat gram increased by about 117 Egyptian pounds ($7.45). On June 30, 2020, it reached 796 Egyptian pounds ($50.70), compared to 679 Egyptian pounds ($43.25) at the end of December 2020.

Naguib expects a 20% increase in sales and noted that the decline in the prices encourages dealers and citizens.

The demand for gold jewelry in Egypt increased by nearly 300% during the second quarter of 2021 compared to the same period in 2020, according to a report by the World Gold Council issued at the end of July.

According to the report, the demand for gold jewelry in Egypt during the second quarter of 2021 recorded 6.5 tons, compared to about 1.7 tons during the same period in 2020.

This increase is due to the return of demand to its normal levels during the second quarter of this year compared to a strongly declining demand in the second quarter of 2020, the report noted, because of the repercussions of the coronavirus pandemic and the lockdown measures that were imposed on the local and global economy.

At the semi-annual level, the demand for jewelry in Egypt during the first half of 2021 recorded about 13.6 tons, compared to about 8.6 tons during the same period in 2020, an increase of about 58.1%, the report stated.

George Abdullah, a member of the Gold Division of the Cairo Chamber of Commerce, told Al-Monitor that sales are increasing as prices continue to drop, which encourages consumers. He expects more sales should prices continue to hit record lows.

“[Global] gold prices are recording very low levels — below $1,700 [in early August] — and this is reflected in the prices of gold in Egypt. This of course may be an incentive to buy,” Abdullah said.

He pointed out that there is a high demand now for 18-karat gold in Greater Cairo and Alexandria, because it comes in different designs and is often made into lightweight sets and items that the consumer can choose from.

Abdullah pointed to obstacles preventing the export of gold jewelry, including appraisal fees, which are imposed by 1% on the exported quantity. He said this could be a financial burden on the final price of the product, at a time when manufacturing costs abroad are much lower than in Egypt — so the competition is tough.

Saad Mohammed, a gold jewelry dealer in Cairo, told Al-Monitor that gold sales have rebounded since Eid al-Adha, especially after the price of a gram of gold significantly dropped, not to mention the secondhand gold market, which rebounded by 5% over the past few days.

Mohammed explained that dealers suffered major losses during the pandemic, which is why they demanded the government to reduce fees and taxes in order to lift the burdens on shops and workshops, thus reducing the price of the final product — but to no avail.

The Egyptian Chamber of Handicrafts sent in early July two memoranda to the Ministry of Trade and Industry and the Ministry of Supply and Internal Trading, after receiving complaints from owners of jewelry-making workshops and workers in the sector as a result of the increase in fees and taxes, which has harmed their businesses significantly.

More from Rasha Mahmoud