In response to a report by the World Gold Council, spending on gold jewelry elevated by 60% in the course of the first 9 months of 2021, in comparison with the identical interval final 12 months. Egypt registered about 2% of world spending on gold.
Egyptians spent about 19.2 billion Egyptian pounds ($1.22 billion) on about 21.1 tons of gold in 2021, in comparison with about 12 billion kilos ($763.1 million) on about 13.8 tons in 2020.
The uptick is because of rising demand for gold as a safe investment possibility in mild of the Central Bank‘s rate of interest cuts to eight.25% for financial savings and 9.25% for loans, in addition to a steady change price for the Egyptian pound towards the US greenback.
There’s an inverse relationship between gold and financial confidence ranges. The extra the economic system improves, the decrease the gold costs. Rafiq Abbasi, head of the gold industry division of the Federation of Egyptian Industries, instructed Al-Monitor, “Within the coming interval, with the emergence of infections with the omicron variant and a few international locations making lockdown choices, the worldwide economic system is anticipated to witness regression, which can result in an increase in gold costs. Now’s the time to purchase gold, earlier than costs rise.”
Abbasi defined that gold is a greater funding possibility than others and that non-public residents, banks and enterprise “all search to purchase gold to protect the worth of their property in case of financial regression.” He mentioned, “Egyptians have all the time had an urge for food for gold” pushed by the shortage of public medical health insurance and unemployment help in addition to worry of future worth fluctuations.
He identified that Egyptians purchase gold for each adornment and saving functions. “Those that purchase gold for the aim of accelerating their financial savings purchase used jewellery, since it’s not topic to the gold tax and is cheaper than new objects. They promote their gold when the worth soars,” he defined.
“Gold retains its worth,” Egyptian investor Manal Mahmoud instructed Al-Monitor. She famous that each time she will be able to afford to she buys gold, which she will be able to promote in case of emergency. “I realized this from my mother,” she mentioned.
Umm Ahmed, a housewife, instructed Al-Monitor that she all the time waits till the worth of gold drops to make gold purchases, particularly used jewellery as a result of it has the bottom costs. “Investing in gold is one of the best ways to economize,” she mentioned.
On Dec. 5, a gram of 24-karat gold bought for between 893 and 895 Egyptian kilos (about $57). The value of the gram of 21-karat gold ranged between 781 and 783 kilos (about $49) and a gram of 18-karat gold bought for between 670-671 kilos (about $42). The value of a pound in gold ranged between 6,248 and 6,264 kilos (about $398).
“Gold is a secure haven,” mentioned Tariq Wafi, who owns a gold store in Cairo’s Al-Hussein district. He added in an interview with Al-Monitor that prospects are more and more doubtless to purchase pure gold bars and 21-karat gold cash than gold jewellery objects due to their decrease workmanship prices.
One other gold supplier on Al-Sagha Avenue, Ahmed Al-Jana, additionally instructed Al-Monitor that folks want to purchase used jewellery as a result of it’s not topic to Egypt’s gold tax. “Used gold is outdated gold items that solely want sprucing and cleansing. They’re items purchased from prospects prepared to promote after which bought once more to different prospects who’re searching for this sort of gold,” he mentioned.
Egyptian investor Ahmed Youssef instructed Al-Monitor that years in the past he went by monetary hardships and his spouse’s gold jewellery was their solely salvation. “That is how I realized to purchase gold as an funding each time I can afford it. That is the one funding I’ve,” he famous.
In a telephone name with Al-Monitor, Yemen al-Hamaki, a professor of economics at Ain Shams College, mentioned that the Egyptians’ rising need to purchase gold is justified. “That is as a result of decline in rates of interest in Egyptian banks and Egyptians’ fixed uncertainty,” she mentioned. “This has been a sample adopted by Egyptians in the course of the previous 20 years within the face of economic crises.”
Hamaki warned that the emergence of the omicron variant of the coronavirus can have a damaging impression on the economic system. She defined, “This will probably be mirrored within the disruption of provide chains and the rise in costs, domestically and globally. Those that have surplus cash will preserve shopping for gold, much more so in mild of its present low worth, and the financial inflation price is more likely to preserve trending upward.”
