7/5-14/5: Weekly precious metals prices & returns update – international gold steadies, U.S. inflation cools, Egypt’s inflation cools, local gold drops - and more.
Market Watch
Weekly Change of Local & International Gold Prices
| Close | Close | Weekly Change | |
| International Gold (LBMA) ($/Oz) | 2,017.0 | 2,020.9 | 0.19% |
| International Gold (LMBA) ($/g) | 64.8 | 65.0 | 0.19% |
| International Gold ($/g) quoted in EGP | 2,006.9 | 2,010.8 | 0.19% |
| Local Gold (LE/g) (24k) | 2,965.0 | 2,714.0 | -8.47% |
| Premium/Discount* | 32.3% | 25.9% |
* Difference between the local and international traded price of gold
Weekly Change of Other Key Precious Metals Prices
| ($/Oz) | |||
| Silver | 25.7 | 24.0 | -6.6% |
| Platinum | 1,062.0 | 1,053.9 | -0.8% |
| Palladium | 1,493.5 | 1,511.9 | 1.2% |
Weekly Returns of Local Gold Compared to Alternative Asset Classes
| Local Gold (LE/g) (24k) | 2,965.0 | 2,714.0 | -8.47% |
| EGX 30 | 17,295.0 | 17,270.0 | -0.14% |
| 1 Year EGP T-Bill** (Yield) | 24.3 | 23.7 | -2.55%*** |
| Official Exchange Rate | 31.0 | 31.0 | 0% |
** Weighted average accepted bids of weekly one-year T-Bill
*** When the yield on T-Bills increases the price of the security decreases, therefore the weekly change is negative, and the opposite is true.
Global Update
U.S. April 2023 inflation cooled to 4.9% on an annual basis, with a monthly increase of 0.4%.
U.S. inflation has been on a gradual decline from a high of 9% in June 2022 to recording 4.9% in April 2023. This points to the somewhat effectiveness of the Fed’s monetary tightening efforts which aim to pull inflation down to the targeted 2%.
The U.S. dollar gained new ground last week, with the DXY rising from 101.3 to close last week at 102.7.
The rise in the U.S. dollar last week has been prompted by strong U.S. economic data for Q1 2023, including lower inflation and positive GDP growth.
Expected gold gains last week were dampened as a result of the dollar’s strong performance, with gold closing last week at $/Oz 2,020, constituting a slight weekly increase of 0.19%.
International gold closed last week at $/Oz 2,020, up by 0.19% compared to the close of $/Oz 2,017 during the previous week. Since the beginning of May 2023, gold has consistently been trading above the $/Oz 2,000 mark, recording an all-time high of $/Oz 2,056 on May 4th.
Local Update
The price of 24k local gold has been declining over the past week, recording a weekly drop of 8.47% to close the week at LE/g 2,714. This comes on the back of last week’s cabinet approval of exempting travelers from gold customs duties.
Last week 24k local gold slid from a close of LE/g 2,965 to around LE/g 2,714, constituting a weekly drop of 8.47%. Egyptians’ recent increased demand for gold has pushed the local gold prices to records high, exceeding the LE/g 3,000 mark in the beginning of May 2023. Last week’s drop in prices can be attributed to the market’s expectation of an increase in supply due to the exemption of import tariffs on individuals entering the county with gold (up to 150 grams).
Egypt’s April inflation cools on a yearly basis to 30.6% compared to 32.7% in March of 2023.
A drop of inflation in Egypt is certainly welcome news, as inflation has been skyrocketing over the past period. This is the first time in over 10 months that inflation decreased, which can be attributed to the recent stability in the foreign exchange market. We may not see another rate hike from the CBE this month, but let’s wait and see.
The FY 2023-24 state budget was presented to the parliament last week, with a projected overall budget deficit of 8% up from an expected 2022-2023 end of year actual deficit of 6.1%. The Ministry of Finance also expects Egypt’s debt to GDP ratio to record 96% by the end of this fiscal year and is projected to decrease to 91.3% in FY 2023/2024.
What To Look Out For This Week
Look out for the CBE monetary policy meeting coming up next week.