Gold prices fell globally during the month of September to below $1,700 an ounce, as a result of expectations that the US Central Bank will raise interest rates for banks for the fifth time in a row this year, next Wednesday.
Although the price in global stock exchanges is one of the most important factors for pricing gold in the local markets, the price of gold in the local market has not decreased in recent days with its global price declining.
The price of an ounce of gold has fallen since the end of last August until today, by 2.6%, as it reached, according to the latest transactions during today, Monday, to 1666 dollars per ounce, compared to 1711 dollars at the end of last month, according to Bloomberg Network data.
Gold traders who spoke to Masrawy explained that the price did not drop in the local market despite the decline in global stock exchanges, as a result of the rise in the price of the dollar against the pound in recent weeks, in addition to the increase in demand over supply, although it is a sub-factor in gold pricing.
The price of the dollar against the pound has risen by 1% since the end of last August until today, as the average price in banks, according to central data, reached 19.37 pounds for purchase, and 19.45 pounds for sale yesterday, an increase of 19 piasters compared to its level at the end of August.
When interest in banks rises, investors tend to sell their gold and invest money in investment tools that are higher in terms of material return, such as benefiting from high interest rates in banks, and selling gold on global stock exchanges causes the price to drop.
Why does gold not decline in Egypt?
Naguib Naguib, former Secretary General of the Gold Division at the Cairo Chamber of Commerce, told Masrawy that the price of gold in Egypt is not declining during the current period, despite the decline it is witnessing in global stock exchanges, as a result of the rise in the price of the dollar against the pound in recent weeks.
Naguib added that during the previous years, the price of gold in Egypt was immediately affected by the price on international stock exchanges, "when the dollar was stable."
According to Naguib, "With the daily price of the dollar rising almost continuously during that period, gold prices in Egypt were relatively stable despite the metal's decline globally."
The price of a gram of 21 karat gold today, Monday, scored about 1116 pounds, the price of a gram of 18 karat gold about 957 pounds, and the price of a gram of 24 karat gold about 1275 pounds, according to Najib.
The pricing of gold in the local market depends on two main factors, namely the global gold price, and the exchange rate of the pound against the dollar, in addition to some minor factors that may affect prices for short periods of time, such as supply and demand.
Hani Milad, Head of the Gold Division at the Cairo Chamber of Commerce, said that the lack of gold price in the local market, as is happening now in global stock exchanges, is due to an increase in demand in Egypt over supply.
Milad added that citizens are now turning again to buy gold as a safe haven, after the continuous rises in the local gold market, and the lack of a decline, as happens with the global stock market.
He stated that the demand for buying gold in stores focuses more on gold bullion compared to the goldsmith, noting that the demand for different weights of bullion varies according to the buyer's ability.