In Egypt, the relationship between interest rates and gold prices has proven to be unconventional, contrary to the traditional notion that higher interest rates lead to lower gold prices. Data from 2022 to 2026 reveals that interest rates and gold prices have increased simultaneously over extended periods. This unexpected trend has been observed as the Central Bank of Egypt prepares to determine the fate of interest rates, sparking widespread anticipation among savers.
According to a report by the Gold Observatory, at the beginning of 2022, the overnight deposit interest rate stood at 8.25%, and the price of 21-carat gold was approximately 800 Egyptian pounds per gram. By the end of 2022, the interest rate had risen to 16.25%, and the price of gold had surged to 1,675 pounds per gram. This upward trend continued into 2023, with the interest rate reaching 19.25% in December and the gold price hitting 3,170 pounds per gram in early 2024.
The year 2024 has been particularly notable for the interplay of various factors influencing gold prices in Egypt. In February and March, the Central Bank raised interest rates by 800 basis points in a single move, including a 600-point increase in an extraordinary meeting on March 6, bringing the rate to 27.25%. This coincided with a decision to liberalize the exchange rate, causing the US dollar to rise from 30.83 pounds in January to 47.79 pounds in April, according to the International Monetary Fund.
The pricing of gold in Egypt is a complex equation involving the global price of gold, the exchange rate, and local supply and demand. Additionally, inflation rates play a crucial role in the competition between savings certificates and gold. During the peak inflation period in August 2023, which reached 37.4%, the attractiveness of savings certificates diminished despite high interest rates.
In 2025, the situation reversed, with the average inflation rate dropping to 14.1% from 28.3% in 2024. This shift made some savings certificates offer a positive real return. Nevertheless, gold prices continued to rise due to a 44% increase in the global gold price between 2024 and 2025. The report noted that interest rate decisions primarily affect the timing and volume of purchases rather than directly influencing gold prices.
The demand for gold bars and coins in Egypt was 23.6 tons in 2025, slightly down from 24 tons in 2024, according to the World Gold Council. This minor decline is attributed to the fact that the same amount of money can purchase less gold due to the price increase, rather than an indication of investors fleeing the market.
The Central Bank of Egypt had previously maintained the interest rate at 19% for deposits and 20% for loans in its last meeting. The Gold Observatory concluded that while interest rates compete with gold for Egyptian savers' funds, they do not solely determine gold prices. Instead, the final price is influenced by the strength of the US dollar, global gold prices, and returns after deducting inflation.
Key points
- Egypt's gold market shows an unconventional relationship between interest rates and gold prices.
- The pricing of gold in Egypt is influenced by a complex equation involving global gold prices, the exchange rate, and local supply and demand.
- Interest rates primarily affect the timing and volume of gold purchases rather than directly influencing gold prices.
