3 minutes read | 02/07/23 - 09/07/23
2/7-9/7: Weekly precious metals prices & returns update – international gold under pressure - local gold drops – Egypt’s June inflation expected to decrease.
Market Watch
Weekly Change of Local & International Gold Prices
| Close | Close | Weekly Change | |
|---|---|---|---|
| International Gold (LBMA) ($/Oz) | 1,918.3 | 1,925.0 | ↑ 0.35% |
| International Gold (LMBA) ($/g) | 61.7 | 61.9 | ↑ 0.35% |
| International Gold ($/g) quoted in EGP | 1,908.7 | 1,915.3 | ↑ 0.35% |
| Local Gold (LE/g) (24k) | 2,548.0 | 2,476.0 | ↓ -2.83% |
| Premium/Discount* | 25.1% | 22.6% |
*Difference between the local and international traded price of gold
Weekly Change of Other Key Precious Metals Prices
| ($/Oz) | Close | Close | Weekly Change |
|---|---|---|---|
| Silver | 22.8 | 23.1 | ↑ 1.4% |
| Platinum | 906.6 | 914.2 | ↑ 0.8% |
| Palladium | 1,235.0 | 1,250.9 | ↑ 1.3% |
Weekly Returns of Local Gold Compared to Alternative Asset Classes
| Close | Close | Weekly Change | |
|---|---|---|---|
| Local Gold (LE/g) (24k) | 2,548.0 | 2,476.0 | ↓ -2.38% |
| EGX 30 | 17,665.3 | 17,120.2 | ↓ -3.09% |
| 1 Year EGP T-Bill** (Yield) | 24.0 | 24.1 | ↑ 0.42%*** |
| Official Exchange Rate | 30.95 | 30.95 | 0% |
** 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
Gold prices recorded a slight increase of 0.35% last week, pressured by positive U.S economic data and expectations that interest rates will stabilize at the current high levels for the foreseeable future.
The gold price closed last week at $/Oz 1,925, up 0.34% from the previous week’s close of $/Oz 1,918. The international spot price of gold has witnessed continued pressures over the past month, dropping by almost 2% during the month of June. U.S. interest yields have remained at high levels over the past weeks, which has applied downwards pressure on gold, and capped the price just short of the $/Oz 1,950.
U.S. Fed June meeting points to the halt of interest rate hikes, over the coming period.
Over the span of the last year U.S. Inflation has dropped by more than half, to a record 4% in May 2023. The cooldown in inflation has further convinced the Fed to stop its monetary tightening cycle and assess market dynamics moving forward, before deciding to raise rates again. However, inflation remains well over the targeted 2% which may indicate that more rate hikes may be conducted by the end of the year if inflation continues to be above the target.
Local Update
Last week, the price of the 24k local gold dropped by almost 2.83% to close the week at LE/g 2,476, down from the previous week’s close of LE/g 2,548.
The local price of the 24k gold has lost almost 20% of its value since its record-breaking high of a little over LE/g 3,000 during April and May of 2023. This drop can be attributed to the restricted liquidity in the market, resulting from the reluctance of gold holders to sell their gold, which was primarily bought during the April and May buying spree. In addition, stability in the foreign exchange market has also dampened demand for gold over the past period.
What to look Out for This Week
Look out for Egypt’s June Inflation figures coming out this week with expectation of a potential decrease!