CAIRO — The price of 14-karat gold in Egypt climbed to a record EGP 4,980 ($160) per gram on Monday, traders said, defying a pull-back in global bullion as households continued to hedge against a weakening pound and persistent inflation.
Dealers at Cairo’s historic Khan el-Khalili market told SourceRated that 18-karat jewelry changed hands at EGP 5,703 per gram, while 21-karat — the country’s benchmark purity — reached EGP 6,667. Premium 24-karat bars were quoted at about EGP 7,420, widening the gap with international spot prices, which slipped 0.6 percent to around $2,155 an ounce in Asian trade.
“Local prices have decoupled from the global trend because consumers are looking for a store of value in the face of currency uncertainty,” said Mohamed Hanafi, a board member of the Gold Division at the Federation of Egyptian Chambers of Commerce. “Every time the pound shows signs of strain, we see a rush into small bars and wedding pieces.”
The pound has lost more than 8 percent on the parallel market since January, according to two foreign-exchange brokers, stoking speculation the Central Bank of Egypt may allow a fourth official devaluation before securing the next tranche of its $8 billion IMF program. Annual urban inflation eased to 29.8 percent in February from 34 percent the prior month but remains more than triple the bank’s 7 percent target.
Globally, bullion cooled after last week’s record highs as investors looked ahead to Wednesday’s Federal Reserve policy meeting for clues on the timing of U.S. rate cuts. Lower rates reduce the opportunity cost of holding non-yielding assets such as gold.
“If the Fed signals patience, spot gold could test $2,100, bringing some relief to Egyptian importers,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank. “But unless the currency market normalises, the local premium is likely to persist.”
Analysts expect price volatility to remain elevated in the run-up to Ramadan, when jewelry gifting traditionally peaks. The government has floated plans for duty-free gold allowances for Egyptians returning from abroad, but industry officials argue that structural shortages will keep the market tight.
For consumers, the divergence means one gram of 21-karat gold now costs the equivalent of roughly $214 in Egypt — almost 40 percent above the global spot-adjusted price. “We are buying security, not just metal,” said shopper Fatma Abdel-Rahman as she queued outside a downtown jeweler.
Market participants will also watch Thursday’s monetary-policy meeting in Cairo, where most economists expect the central bank to leave its key overnight deposit rate at 19.25 percent after a surprise 200-basis-point hike in early February.
Should policymakers opt for another increase or allow the currency to weaken, dealers warn that the psychological EGP 5,000 threshold for 14-karat jewelry could soon be tested again.