3 minutes read | 19/02/23 - 26/02/23
Market Watch
Weekly Change of Local & International Gold Prices
| Close | Close | Weekly Change | |
|---|---|---|---|
| International Gold (LBMA) ($/Oz) | 1,842.5 | 1,811.1 | ↓ -1.70% |
| International Gold (LMBA) ($/g) | 59.2 | 58.2 | ↓ -1.70% |
| International Gold ($/g) quoted in EGP | 1,813.7 | 1,784.6 | ↓ -1.61% |
| Local Gold (LE/g) (24k) | 1,928.4 | 1,911.2 | ↓ -0.89% |
| Premium/Discount* | 5.9% | 6.6% |
*Difference between the local and international traded price of gold
Weekly Change of Other Key Precious Metals Prices
| ($/Oz) | Close | Close | Weekly Change |
|---|---|---|---|
| Silver | 21.7 | 20.8 | ↓ -4.2% |
| Platinum | 921.7 | 912.4 | ↓ -1.0% |
| Palladium | 1,510.2 | 1,422.0 | ↓ -5.8% |
Weekly Returns of Local Gold Compared to Alternative Asset Classes
| Close | Close | Weekly Change | |
|---|---|---|---|
| Local Gold (LE/g) (24k) | 1,928 | 1,911 | ↓ -0.89% |
| EGX 30 | 17,003 | 17,205 | ↑ 1.19% |
| 1 Year EGP T-Bill** (Yield)** | 22.27 | 22.39 | ↑ -0.54%*** |
| Official Exchange Rate | 30.62 | 30.65 | ↑ 0.10% |
*** When the yield on T-Bills increases the price of the security decreases, therefore the return is negative, and the opposite is true.
Global Update
The U.S. Fed is still committed to reducing inflation, which recorded 6.4% in January 2023, through more interest rate hikes.
According to the Fed’s January meetings minutes published last week, officials underscored their continued concern regarding high U.S. inflation, which is well above the target of 2 percent. U.S. Inflation increased by 0.5% in January following a 0.1% increase in December. On a yearly basis, CPI recorded a 6.4% increase compared to the same period in 2022. Despite the marked reduction in the rate of price increases, the FED pointed to an expected interest rate hike in its next meeting, due to take place on March 22nd, 2023.
International gold price declined last week on the back of expected U.S. rate hikes.
On the back of bullish remarks from the FED regarding interest rate hikes and better-than-expected U.S. economic data, international gold fell sharply from $/Oz 1,842.5 to close last week at $/Oz 1,811, constituting a weekly change of 1.7 percent. Gold has been down almost 7 percent in February. You can learn more here about the relationship between gold and interest rates.
The U.S. dollar increases to a seven-week high on the back of high U.S. inflation and likely interest rate hikes.
The dollar index (DXY) closed last Friday at $105.2 up from a Monday opening of $104. High U.S. inflation data and expectations of more rate hikes on the part of the FED have prompted demand for the greenback pushing it to a seven-week high last week. A stronger dollar also played a major role in the decline of international gold prices last week. Learn more about the dollar index (DXY) here.
The Dow Jones Industrial Average down almost 700 points last week.
All major indexes declined last week recording the lowest levels in 2023, with the Dow Jones, S&P, Nasdaq down 2.06, 2.0 and 2.5 percent respectively. The decline firmly came on the back of the worrisome inflation outlook and risks of a potential global recession.
Local Update
Local gold prices declined by 0.89 percent last week, following the drop in international gold prices.
Throughout February, the 24k local gold price has been gradually declining from its highest point of LE/g 2,011 to closing last week at LE/g 1,911. Local gold is directly affected by the price of international gold, and as mentioned international gold has been witnessing a gradual decline since the beginning of February. However, we may see local gold prices shoot up as expectations of more EGP devaluation increase.
Egypt issued its first US-denominated sovereign Islamic sukuk, with a total value of $1.5 billion and a yield of 11 percent.
In its continued efforts of diversifying its debt portfolio and insuring adequate financing, Egypt’s government issued a first-of-its-kind Islamic sukuk, which saw 4x subscription, with a total value of $6.1 billion from 250 investors.
PM Madbouly announced that Egypt recorded $3.3 billion of foreign direct investments in the quarter of July – September 2022, its highest ever.
In a press conference last week, the Prime Minister said that Egypt’s FDI’s increased by 94 percent in the period July – September 2022 compared to the same period in 2021. As Egypt continues to implement structural reforms under the auspices of the IMF program, it is expected that FDIs would continue to increase.
What to look Out for This Week
Keep an eye out for international and local gold prices, as expectations of a FED interest rate hike increases.