3 minutes read | 10/09/23 - 17/09/23
10/9-17/9: Weekly precious metals prices & returns update – international gold stabilized – ECB raises rates - local gold drops slightly, and more.
Market Watch
Weekly Change of Local & International Gold Prices
| Close | Close | Weekly Change | |
|---|---|---|---|
| International Gold (LBMA) ($/Oz) | 1,918.9 | 1,923.7 | ↑ 0.25% |
| International Gold (LMBA) ($/g) | 61.7 | 61.8 | ↑ 0.25% |
| International Gold ($/g) quoted in EGP | 1,909.3 | 1,914.0 | ↑ 0.25% |
| Local Gold (LE/g) (24k) | 2,508.3 | 2,491.2 | ↓ -0.68% |
| Premium/Discount* | 23.9% | 23.2% |
*Difference between the local and international traded price of gold
Weekly Change of Other Key Precious Metals Prices
| ($/Oz) | Close | Close | Weekly Change |
|---|---|---|---|
| Silver | 22.9 | 23.0 | ↑ 0.5% |
| Platinum | 897.2 | 929.6 | ↑ 3.6% |
| Palladium | 1,198.5 | 1,249.9 | ↑ 4.3% |
Weekly Returns of Local Gold Compared to Alternative Asset Classes
| Close | Close | Weekly Change | |
|---|---|---|---|
| Local Gold (LE/g) (24k) | 2,508.3 | 2,491.2 | ↓ -0.68% |
| EGX 30 | 19,429 | 19,540 | ↑ 0.57% |
| 1 Year EGP T-Bill** (Yield) | 25.5 | 25.7 | ↑ 0.78%*** |
| 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
International gold continues to hold its price above the $/Oz 1,900 mark over the past 6 months, witnessing a slight 0.25% weekly hike to close last week at $/Oz 1,924, on the back of the yuan's rise against the dollar and diminishing expectations of further interest rate hikes.
Global demand for gold has been solid over the past period due to market sentiment leaning towards little or no rate hike from the Fed moving forward. More recently, due to China’s stronger-than-expected GDP data, the value of the Yuan increased relative to the dollar, which has further prompted demand for the yellow metal and increased prices.
The European Central Bank raised rates last week to 4%, amidst higher inflation data.
This is the ECB’s 10th consecutive rate hike over the past period. A 4% deposit rate stands to be the highest on record since the establishment of the EU, and until inflation rates drop from the current 5% to below the ECB target of 2%, it is expected that interest rates will remain elevated.
U.S. August inflation rose by 0.6% compared to the previous months to reach 3.7% on a yearly basis.
The August U.S. inflation hike was mainly due to increasing energy prices, which alone recorded a whopping 5.6% increase in August.
Local Update
Last week, the price of the 24k local gold slid slightly by 0.7% to close the week at LE/g 2,491 down from the previous week’s close of LE/g 2,508.
Although global prices have witnessed recent stability, the local price of the 24k gold continued to lose ground due to the recent stability in the foreign exchange market and the sufficient supply of gold within the local market.
Egypt’s August inflation stands at 37.4% up from 36.5% recording a record-breaking all-time high for the 3rd consecutive month.
Despite marked interest rate hikes, inflation in Egypt remains critically elevated, due to both supply and demand side pressures, which may allude to more significant interest rate hikes from the CBE moving forward.
Last week President El Sisi announced key wage hikes and other social benefits, amidst higher cost of living and deteriorating purchasing power.
Key adjustments included raising monthly minimum wages to EGP 4k, from the current EGP 3.5k, a one-time bonus payment of around EGP 600 to public sector employees and raising the personal income tax exemption from EGP 36k to EGP 45k.