A member of the Gold Division of the Egyptian Chambers of Commerce Sameh Abdel-Hakim on Monday explained the reasons behind the current rise in gold prices in the Egyptian market.
During his interview with Sada el-Balad TV, he explained one of the main reasons is the trend among global central banks to increase their gold reserves, in addition to a shift in savings habits among countries and individuals.
This began in 2019 and intensified with the COVID-19 pandemic, he noted.
Abdel-Hakim added that customers who previously relied on bank savings have turned to investing in gold, as it has yielded higher returns compared to bank interest rates.
He pointed out that periods of high demand sometimes exceed supply in the markets, which is one of the main factors behind the continued rise in gold prices.
Abdel-Hakim added that the increased demand for gold bullion has led to a decline in demand for gold jewelry.
He stated that selling bullion harms jewelry merchants due to the lower manufacturing costs, with bullion costing only about 1.5 percent, compared to about five percent for gold jewelry.
Strong upward surges are common
He noted that consumers previously preferred jewelry before the rise of bullion investment following the COVID-19 pandemic.
Abdel-Hakim noted that gold has, for over 40 years, experienced strong upward surges upon reaching record levels, followed by profit-taking and an increase in supply on global exchanges, before temporarily declining and then rising again, surpassing its previous highs.
He explained that the average price of gold in 2020 was around LE700 per gram, while it currently stands at approximately LE 6,700, reflecting an almost tenfold increase in just six years.
Abdel-Hakim noted that any movement in the global price of gold, even a $10 increase per ounce, is directly reflected in prices in the Egyptian market.
Why have gold prices soared to their highest point? Egypt Independent.
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