4/6-11/6: Weekly precious metals prices & returns update – international gold slightly rises – EU recession - local gold drops - and more.
Market Watch
Weekly Change of Local & International Gold Prices
| Close | Close | Weekly Change | |
| International Gold (LBMA) ($/Oz) | 1,947.8 | 1,961.1 | ↑ 0.68% |
| International Gold (LMBA) ($/g) | 62.6 | 63.0 | ↑ 0.68% |
| International Gold ($/g) quoted in EGP | 1,938.0 | 1,951.3 | ↑ 0.68% |
| Local Gold (LE/g) (24k) | 2,679.7 | 2,656.8 | ↓ -0.85% |
| Premium/Discount* | 27.7% | 26.6% |
* Difference between the local and international traded price of gold
Weekly Change of Other Key Precious Metals Prices
| ($/Oz) | |||
| Silver | 23.6 | 24.3 | ↑ 2.9% |
| Platinum | 1,007.3 | 1,012.4 | ↑ 0.5% |
| Palladium | 1,427.6 | 1,327.2 | ↓ -7.0% |
Weekly Returns of Local Gold Compared to Alternative Asset Classes
| Local Gold (LE/g) (24k) | 2,679.7 | 2,656.8 | ↓ -0.85% |
| EGX 30 | 17,533.0 | 17,521.0 | ↓ -0.7% |
| 1 Year EGP T-Bill** (Yield) | 23.98 | 24.0 | ↑ 0.08%*** |
| Official Exchange Rate | 30.95 | 30.95 | 0% |
** Weighted average accepted bids of weekly one-year T-Bill
*** When the yield on T-Bills increases the price of the security decreases, therefore the weekly change is negative, and the opposite is true.
Global Update
Gold prices witnessed a slight drop last week due to a stronger dollar performance, however gold recorded a weekly gain of around 0.7% closing the last week at $/Oz 1,961 up from $/Oz 1,947.
The downwards pressure on gold prices instigated by a stronger dollar performance last week was offset by expectations that the U.S fed will halt interest rate hikes for the foreseeable future. Since April of this year, gold prices have been hovering around the $/Oz 1,950 to the $/Oz 2,000 mark, which clearly indicates strong support by investors amidst a turbulent economic landscape.
The Euro-zone may enter a recession, with Q4 2022 and Q1 2023 GDP contracting by 0.1% consecutively.
Despite previous more optimistic projections, the E.U. GDP growth has contracted over the course of the previous 2 quarters, which signals a dip into a technical recession. Some of the key reasons behind the drag on growth are increased demand for energy, implications of the Russia/Ukraine conflict, and the high inflation/interest rate environment.
Local Update
Last week, the price of the 24k local gold dropped by almost 1% to close the week at LE/g 2,656, down from the previous week’s close of LE/g 2,679.
Stability in the foreign exchange market and therefore dampened demand for gold over the past weeks are key reasons behind the gradual easing of local gold prices. However local gold is still trading 27% higher than the international gold price, pointing to persistent demand side pressures and shortages in supply.
Egypt’s May inflation picked up again, growing by 32.7% year on year, after dropping in April.
The rise in May inflation can be attributed to the recent hike in price of diesel oil and other subsidized commodities. If inflation remains critically high and future expectations of EGP devaluation continue to linger, we may very well see another rate hike on the part of the CBE.
What to look Out for This Week
Look out for the Fed meeting next week where expectations point to rates remaining unchanged.