3 minutes read | 26/02/23 - 05/03/23

26/02-05/03: Weekly precious metals prices & returns update – international and local gold prices up – dollar declines – EGX 30 down and more.

Market Watch

Weekly Change of Local & International Gold Prices

Weekly Change of Other Key Precious Metals Prices   

Weekly Returns of Local Gold Compared to Alternative Asset Classes

Global Update

The international gold price was up almost 2.48%, last week amidst a decline in the U.S. dollar and treasury yields.

The international gold price closed last week at $/Oz 1, 856 up from a close of $/Oz 1,811 during the previous week, constituting a weekly growth of 2.48 percent. Gold has gained back some of its February losses, last week due to a weakened dollar which closed last week at 104.5 down from a close of 105.2 during the previous week, its biggest weekly loss since mid-January. Last Friday The U.S. 10-year Treasury yield also fell to 3.9%, down from a high of 4.1% on Thursday.

Both the U.S. Fed and the ECB believe that interest rates need to stay high for a longer period.

Remarks from Fed and ECB officials over the past week have reflected worry regarding the slow pace of decrease in inflation and continued global pressures that may drive prices upwards over the coming period. EU inflation also remains high, whereby ECB remarks point to an imminent rise in interest rates by the end of March.  

EU February inflation records 8.5% down slightly from 8.6% in January.

Inflation in the Euro-Zone remains high as February data shows a significant increase in food prices.

Local Update

Local gold prices shot up last week by 8.8% percent, following the hike in the international gold prices and expectations of an upcoming EGP devaluation.

As we mentioned last week the expectation is that gold will rise in anticipation of more interest rate hikes and an upcoming devaluation. In addition, local gold prices increased on the back of the rise in international gold prices promoted by a decline in the dollar and U.S. treasury yields. Egyptians are buying more gold as the prevalent expectations are that prices may increase, following another EGP devaluation. This increased demand, further ground truths Egyptians’ belief in gold as a safe haven asset.

EGX 30 was down almost 1% last week on the back of a selloff from foreigners.

The EGX 30 lost almost 173 points last week due to a selloff on the part of foreigners and a decline in prices of key highly weighted stocks.

Egypt hikes oil prices by 5-9% on 80, 92, and 95 octane fuel.

The price per liter of 80-octane fuel increased by almost 9% to reach LE 8.75 up from LE 8. 92-octane petrol also rose 5% to reach LE 10.25 up from LE 9.25, while 95-octane petrol increased from LE 10.75 to LE 11.50. It is noteworthy to mention that raising fuel prices may add more fuel to the fire and increase inflation levels moving forward.

Egypt’s Net Foreign Assets declined by almost $1.7 billion in January to reach a deficit of $21.7 billion compared to $20 billion in December.

Net Foreign Assets are the combined balance of foreign assets owned by a country, less assets in the country which are owned by foreigners. Egypt’s negative balance (deficit of $21.7 billion) indicates that Egypt is a net debtor. This means that Egypt owns fewer foreign assets compared to foreigners’ ownership of onshore assets. Due to the maturation of debt obligation over the past period, the banking sector liabilities increased, therefore widening the NFA deficit.

 What to look Out for This Week

Keep an eye out for increases in international and local gold prices, as expectations of a FED interest rate hike and EGP devaluation increases.

Egypt’s February Inflation data coming out this week, with expectations of higher figures compared to January.