Gold prices in Egypt’s domestic market recorded a sharp decline over the week from 7 to 14 November, with 21-karat gold, the most widely traded grade, falling from EGP 6,210 per gram last Saturday to EGP 5,950 on Saturday, according to data from iSagha, an online gold and jewellery trading platform.
According to the platform, the domestic decline reflected a global downturn following the release of US inflation figures for October, which came in above market expectations. The data strengthened expectations that the US Federal Reserve would maintain its restrictive monetary policy and potentially raise interest rates, while the dollar remained strong globally.
The platform noted that the dollar’s depreciation against the Egyptian pound added further downward pressure on gold prices in local currency, as the pound’s appreciation reduced the precious metal’s theoretical value.
Meanwhile, the widening gap between domestic gold prices and their theoretical value, calculated based on international ounce prices and the exchange rate, became increasingly apparent. The gap reached EGP 134.74 per gram, equivalent to 2.31%, on 12 November, highlighting the continued divergence between locally traded prices and levels justified by global market movements and exchange rates.
Saeed Embaby, Executive Director of iSagha, said the current pricing gap was neither normal nor healthy for the market, expressing concern that it had exceeded EGP 134 per gram.
He explained that the discrepancy meant consumers were not fully benefiting from falling international gold prices and the improvement in the exchange rate, but were instead continuing to pay more than the metal’s theoretical value.
Embaby said the decline in 21-karat gold from EGP 6,210 to EGP 5,950 per gram did not automatically mean that prices had become fair or that it was an appropriate time to buy.
He stressed that the more important question was not simply how much domestic prices had fallen, but how far they remained from their theoretical value.
Embaby added that a pricing gap of this magnitude required consumers to exercise caution and avoid rushing to buy in response to apparent price declines.
He warned that the gap was damaging the market even before affecting consumers, as it undermined confidence in pricing mechanisms, increased uncertainty and made it difficult for buyers to determine a fair purchase price.
He noted that a persistent gap could lead consumers to postpone purchasing decisions, weigh on trading activity and create the impression that the domestic market was not fully responding to international developments.
The iSagha executive explained that part of the pricing gap was linked to hedging by bullion traders, who feared a sudden rebound in international gold prices or the dollar exchange rate and sought to protect their financial positions by maintaining an additional margin.
However, he stressed that such hedging should not become a permanent burden on consumers or force buyers to bear the cost of future risks that had not yet materialised.
He said traders had the right to manage their risks, but consumers were equally entitled to transparent and fair prices that reflected movements in international gold prices and exchange rates.
Embaby argued that it was unreasonable for both international gold prices and the dollar to decline while domestic prices continued to carry a substantial premium justified by hedging.
He warned that allowing this situation to persist would undermine market balance and weaken trust between market participants.
Embaby urged consumers not to regard a price decline alone as a guaranteed buying opportunity.
He advised buyers to ask about gold’s theoretical value per gram, compare prices from several sellers, and enquire about making charges, hallmarking fees and any additional costs before completing a purchase.
He added that when the pricing gap was substantially negative, consumers would be better advised not to commit all their available funds to a single purchase, but instead to buy in stages and only if they had a genuine need for gold.
Embaby also advised consumers against buying out of fear that prices might rise again or accepting a price whose components they could not clearly understand.
He stressed that transparency was the solution and that narrowing the pricing gap was a shared responsibility among traders, trading platforms and the relevant authorities.
A strong market, he said, was one that protected consumers while allowing traders to manage their risks fairly.
Embaby concluded that consumers should not ask only how much gold prices had fallen, but also whether domestic prices had declined in proportion to movements in international gold prices and the dollar, and whether the pricing gap worked in their favour or against them.
He emphasised that not every price decline represented a buying opportunity and that not every quoted price was necessarily fair.
