According to a recent report by World Gold Council (WGC), Egypt has played a pivotal role in propelling investments in gold bars and coins across the Middle East. This contribution is striking, representing almost a third of the entire regional demand of 32 tons.
In the initial half of 2023, Egypt’s appetite for gold nearly matches its total demand for the entire year of 2022. This surge is attributed to Egyptians turning to the precious metal as a secure refuge against the escalating inflation sparked by the devaluation of their local currency, as highlighted by the report’s data.
The trajectory of the Egyptian pound’s exchange rate against the USD has been tumultuous since March 2022, precipitated by the Russian-Ukrainian conflict. The currency has suffered a profound decline, losing over 75 percent of its value.
Beginning at EGP 15.7 to the USD in March 2022, the exchange rate gradually crept up to EGP 18.56, followed by a continued ascent to EGP 19.66 until October 28. At that point, it saw a sharp rise to EGP 23.15. By March 2023, the USD stood at approximately EGP 30.9, a value that persists to this day.
The WGC report states, “Easing restrictions on personally carried gold have alleviated supply constraints within the local market, evident in decreased premiums on gold investment products. Despite a challenging economic backdrop and potential further currency depreciation, demand remains robust.”
Responding to a shortage in the local gold supply leading to price surges, Egyptian Prime Minister Mostafa Madbouly enacted a decree on May 11. This decree granted travelers carrying gold an exemption from customs duties and related fees (excluding value-added taxes) for a six-month period.
Gold prices have exhibited stability since the onset of July. However, they have maintained a gradual downward trend since May. On July 31, the price of 24-carat gold reached EGP 2,445.75 per gram, marking a 7.7 percent decline from its June 1 level and a 17.6 percent drop from its May 1 level.
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