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3 minutes read | 06/08/23 - 13/08/23
6/8-13/8: Weekly precious metals prices & returns update – precious metals drop – international gold drops – local gold surges
Market Watch
Weekly Change of Local & International Gold Prices
| Close | Close | Weekly Change | |
|---|---|---|---|
| International Gold (LBMA) ($/Oz) | 1,942.0 | 1,913.0 | ↓ -1.49% |
| International Gold (LMBA) ($/g) | 62.4 | 61.5 | ↓ -1.49% |
| International Gold ($/g) quoted in EGP | 1,932.3 | 1,903.4 | ↓ -1.49% |
| Local Gold (LE/g) (24k) | 2,465.0 | 2,691.0 | ↑ 9.17% |
| Premium/Discount* | 21.6% | 29.3% |
*Difference between the local and international traded price of gold
Weekly Change of Other Key Precious Metals Prices
| ($/Oz) | Close | Close | Weekly Change |
|---|---|---|---|
| Silver | 23.6 | 22.7 | ↓ -3.8% |
| Platinum | 926.3 | 916.2 | ↓ -1.1% |
| Palladium | 1,260.0 | 1,296.0 | ↑ 2.9% |
Weekly Returns of Local Gold Compared to Alternative Asset Classes
| Close | Close | Weekly Change | |
|---|---|---|---|
| Local Gold (LE/g) (24k) | 2,465.0 | 2,691.0 | ↑ 9.17% |
| EGX 30 | 17,713 | 17,710 | ↓ -0.02% |
| 1 Year EGP T-Bill** (Yield) | 24.1 | 24.7 | ↑ 2.49%*** |
| 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
Last week the U.S. dollar DXY index rose from $102 to $102.9 instigated by the recent deflation in China and stronger-than-expected U.S economic data
The greenback had sustained several blows over the past period due to the swift deceleration of inflation and the gradual drop in U.S. treasury yields. However more recently, as the outlook expectation of the U.S. economy continues to improve, we might see stronger dollar performance moving forward.
The international gold price has witnessed a 1.5% weekly drop to close last week at $/Oz 1,913, amidst stronger dollar performance, high U.S. interest rates, and an improved U.S. economic outlook.
Gold prices have been on a downward trend for almost a month now due to the recent Fed rate hike, improved U.S. inflation, and job market data. In addition, recent deflation in China has directed investors’ attention to the U.S. dollar, increasing demand and therefore weighing down on gold prices.
Local Update
Despite the several rate hikes conducted by the CBE, Egypt’s July annual urban inflation surged to 36.5% compared to 35.7%, pushed by rising food prices, and lasting repercussions of the EGP devaluation.
It is noteworthy to mention that historically, the summer months in Egypt record the highest inflation figures of the year due to higher consumption rates and increased demand for goods and services. However, a rapid increase in inflation despite marked stability in the exchange rate and several interest rate hikes over the past period is alarming. The CBE targets around 7% inflation by the end of 2023, therefore we can expect major interest rate hikes over the coming period, in an attempt to put the brakes on the critically high inflation levels.
Last week, the price of the 24k local gold surged by almost 10% to close the week at LE/g 2,691 up from the previous week’s close of LE/g 2,465.
Although global prices have witnessed a recent drop, the local price of the 24k gold has gained close to 10%. This increase can be attributed to the restricted supply in the market and higher demand due to recent news pertaining to the imminent devaluation of the EGP over the coming period.