CAIRO: Minister of Trade and Industry Samir El-Sayed announced Saturday a decision to lift the ban on gold exports, which was scheduled to continue until June 30. The decision drove up prices in the local gold market.
A statement on the ministry’s website said that the decision was due to the return of stability to the stock market and favorable political and economic conditions.
The minister said in the statement that the reason the ban was issued was to ensure that gold was not smuggled out of the country saying it was an issue of national security.
Mona Manosur, director of research at CI Capital, said that the ban should have been lifted by the end of June and it was originally set to limit the rising gold prices in the local market.
Mansour added that lifting the ban will “further increase gold prices as it will reduce the supply available for the local market.”
Jewelers and gold traders have welcomed the lifting of the ban which they say will lead to a free market that is better for business. The impact of the decision will be clearer on Monday, when both local and international markets will be open for trading.
“We usually set our prices to the New York price, but during the ban traders would agree to a certain price to set for the local market. The lifting of the ban is a positive step, because it took the price setting power away from local traders and prices now will reflect world prices,” said Ahmed El Sirgany, a Cairo-based jeweler.
Osama Ahmed El Galla, a wholesale gold trader, agreed that the ban lift is a positive step saying that under the ban the local gold market was disconnected completely from international markets.
There is an ongoing surplus in gold in the country and traders had usually exported this surplus but under the ban there was excess in supply and lower demand leading to lower prices.
“To be exact, the price of 31.1 grams of pure gold cost $1,380 in local markets and $1,460 internationally,” he said.
“The export ban also led to illegal smuggling of gold, forcing traders to reduce the prices,” he added.
El Galla said that the events had caused total traded volumes of gold to go down affected by the troubled economy, with decreased spending on gifts and presents.
He added that the market has even seen some reselling of gold for liquidity.
Nevertheless, El Galla was optimistic now that the ban was lifted, he said that “by the end of the week, there is no doubt that prices will get back to normal.”
El Sirgany was also optimistic saying that the gold market only began to pick up since Mother’s Day on March 21, saying that he was thoroughly satisfied with the demand in the recent period.
“If this continues,” he said, “there is a good chance that the market will get back to normal.”
