CAIRO: The price of gold increased by $2.60, or 0.2 percent, to $1,183.30 an ounce on Monday, reaching as high as $1,188.40 at one point in the day on the New York Mercantile Exchange.
There has invariably been an impact on the price of gold in Egypt, which increased by nearly LE 4, due to the confluence of events and fluctuations at the international level.
At the local level in Egypt, the effects of the continued rise in the price of gold have certainly been felt.
Cairo-based jewelry storeowner Ahmed Sirgany lamented, “My business has taken a major hit by the continued upward trend in the price of gold.”
He pointed out that this is nothing new. As it happens, “the price of gold has been going up for about the last three years. Of course, the price drops from time to time, but it is only temporary; it inevitably goes back on an upswing.”
As a result, Sirgany has had no choice but to raise prices in his shop. Just as a small example, “a small ring containing just two to three grams of gold now runs for around LE 1,000, which is actually a rather high price for such a product”, he indicated.
The increase in international prices comes after the European Union and the International Monetary Fund (IMF) announced they had finally reached an agreement to bail out Greece for a total of $146 million after a series of protracted negotiations.
In spite of Greece having received a bailout for its substantial debt, investors remain skeptical about the Eurozone’s ability to perform.
Last week rating agencies downgraded Greek debt to junk status and reduced ratings for Portuguese and Spanish debt, driving down investors’ already weary confidence in certain European economies.
All of this uncertainty is resulting in an investor drive toward the US dollar and precious metals, such as bullion.
Traditionally, investors turn to precious metals when the economy hits a rough spot. Consequently, it can be inferred that any further financial instability in the market place will drive up the price in gold even more, as more investors will seek refuge in its reliability as an investment instead of placing their money in volatile currencies.
In Egypt not only have small shop owners been hit by the continued rise in the price of gold; the larger retailers and wholesalers have clearly as well.
“Retailers and wholesalers are offering great deals and advantages in the hopes of enticing small sellers, such as myself, so that we will start buying again,” Sirgany said. “But unfortunately, due to a drop in sales in my shop, liquidity is seriously lacking”, which means that Sirgany has regrettably not been able to capitalize on such appealing offers.
It seems that he is not the only shop owner feeling the squeeze. “Other small shop owners are in the same situation: they have lots of merchandise on hand, but no cash”, Sirgany noted.
Customers will likely return once the price of gold comes back to more normal levels, but this is largely dependent on economies such as those in Europe and the US getting back on their feet.
