3 minutes read | 26/03/23 - 02/04/23
26/3-2/4: Weekly precious metals prices & returns update – international gold down - local gold prices up – EU inflation cools– CBE raise rates and more.
Market Watch
Weekly Change of Local & International Gold Prices
| Close | Close | Weekly Change | |
|---|---|---|---|
| International Gold (LBMA) ($/Oz) | 1,811.1 | 1,968.9 | ↓ -0.45% |
| International Gold (LMBA) ($/g) | 63.6 | 63.3 | ↓ -0.45% |
| International Gold ($/g) quoted in EGP | 1,967.9 | 1,959.0 | ↓ -0.45% |
| Local Gold (LE/g) (24k) | 2,296.9 | 2,485.5 | ↑ 8.21% |
| Premium/Discount* | 14.3% | 21.2% |
*Difference between the local and international traded price of gold
Weekly Change of Other Key Precious Metals Prices
| ($/Oz) | Close | Close | Weekly Change |
|---|---|---|---|
| Silver | 23.2 | 24.1 | ↑ 3.8% |
| Platinum | 984.4 | 994.5 | ↑ 1% |
| Palladium | 1,422.0 | 1,459.0 | ↑ 2.6% |
Weekly Returns of Local Gold Compared to Alternative Asset Classes
| Close | Close | Weekly Change | |
|---|---|---|---|
| Local Gold (LE/g) (24k) | 2,297 | 2,485 | ↑ 8.2% |
| EGX 30 | 15,625 | 16,418 | ↑ 5.1% |
| 1 Year EGP T-Bill** (Yield) | 22.59 | 22.68 | ↓ 0.41%*** |
| 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 price down slightly last week, but future expectations are promising.
The international gold price closed last week at $/Oz 1, 969 down from a close of $/Oz 1,978 during the previous week, constituting a weekly growth of -0.45 percent. The sluggish performance of gold last week came on the back of higher bond yields and cooler than expected US inflation. Analysis point to an expected rise in gold price as demand of the dollar weakens and bond yields drop further. In additions if talks between China and the KSA regarding settling oil trades using the Chinese Yuan, becomes a reality, this most certainly curb demand for the dollar and therefore weaken its value.
E.U March Inflation cools to reach 6.9%, amid lower energy costs.
The E.U headline inflation dropped from 8.5% in February to 6.9% in March, amid a decreased energy price, which have eased costs of living across the continent. If inflation continues to cool this may suggest that the ECB may be approaching the end of its yearlong monetary tightening cycle.
Local Update
The local gold price continues to rise due to higher demand, underpinned by the expectation of an upcoming devaluation. Despite a drop in international gold price, the local gold price increased by 8% last week alone!
As we mentioned last week the expectation is that gold will rise in anticipation of more interest rate hikes and an upcoming devaluation. Egyptians’ demand for gold is increasing as the prevalent expectations are that prices may increase, following another EGP devaluation. Last week, the 24k local gold closed at LE/g 2,485.5 up from a close of LE/g 2,296.9.
The CBE hikes rate by 2% to reach 19.25% on lending and 18.25% on deposits.
The CBE continues to fight Egypt’s soaring inflation, which was been driven by increased demand, foreign exchange volatility and global supply chain pressure. The CBE targets 1 digit inflation of around 7% by the end of 2024, therefore this rate hike was very much expected, and projections point to more rake hikes during the coming period, to be able to curb inflation.
What to look Out for This Week
Keep an eye out for Egypt’s Inflation and reserve data coming out this week.