Egypt's gold market witnessed a sudden drop in prices on Monday, with 21-carat gold, the most traded, opening at 6100 pounds per gram before settling at 6090 pounds per gram. This represents a loss of 130 pounds per gram from the previous day's close of 6230 pounds per gram. According to Gold Billion, a market analysis platform, the decline is attributed to the sharp drop in global gold prices and limited movement in the dollar's exchange rate against the Egyptian pound.
The decline in gold prices broke through the support level of 6200 pounds per gram, increasing selling pressure and pushing prices to attempt to break through the 6100-pound level. This comes after a 2.3% decline in gold prices last week, with the local market still influenced by global gold trends. Gold prices in Egypt are currently trading at a discount of 37 pounds per gram compared to the fair price, amid reduced local demand and sufficient market supply.
The global gold market also experienced a significant decline, with gold prices dropping by 3.2% to reach a seven-week low of $4142 per ounce. The decline is attributed to the failure of gold prices to close above $4300 per ounce last week, leading to a break in the support level at $4250 per ounce. Market analysts expect the downward trend to continue, with the main support level at $4000 per ounce.
The decline in gold prices comes amid an increase in crude oil prices to nearly $105 per barrel and high US government bond yields, which put additional pressure on gold. Market expectations of a potential US interest rate hike in October also contributed to the decline, with a 70% probability of a rate increase.
Despite the limited movement in the dollar's exchange rate, the sharp decline in global gold prices had a significant impact on the Egyptian market. The local market's reliance on global trends and limited domestic demand have made it vulnerable to fluctuations in international gold prices.
Gold Billion's analysis suggests that the current market conditions, including the discount in gold prices and sufficient supply, may lead to increased exports of gold by local companies. This could be an opportunity for Egyptian companies to benefit from the current price gap.
The sudden drop in gold prices may present an opportunity for investors and consumers to purchase gold at lower prices. However, market analysts advise caution, citing the potential for further declines in gold prices in the coming weeks.
Key points
- Gold prices in Egypt have dropped by 130 pounds per gram, with 21-carat gold trading at 6090 pounds per gram.
- The global gold market has declined by 3.2%, reaching a seven-week low of $4142 per ounce.
- The decline in gold prices is attributed to the sharp drop in global gold prices and limited movement in the dollar's exchange rate against the Egyptian pound.
