Cairo

- It seems that a new purchasing culture awaits the Egyptians soon, following the rise in gold prices during the past months, as official officials are looking to produce 14-carat gold jewelry and put them on the market.

The General Division of Gold in the General Federation of Chambers of Commerce announced the start of discussions to produce 14 karat as a minimum for wrought gold, in accordance with the taste of the Egyptian consumer.

The price of the yellow metal fluctuated at a rapid rate between rise and decline, over the course of one day, which prompted the move in the direction of producing low-caliber gold, according to an official statement issued by the Gold Division, last week.

Head of the Gold Division, Hani Milad, said that the production of 14 karat would reduce the burdens on young people who are about to marry and reduce the increasing demand for ore, which leads to great stability in prices.

According to the data of the World Gold Council, the Egyptians’ purchases of gold reached 30.3 tons, during the past year, with a value of 27.5 billion pounds (1.5 billion dollars), an increase of 39% compared to 2020, when purchases recorded about 21.9 tons.

And the per capita share of consumer demand for gold in Egypt reached 0.3% during 2021.

low price

In turn, the head of the Gold Division explained that the European and American markets are trading 14 karat normally, while the matter is different with the Egyptian market, where it is traded in a very narrow framework.

He added - in televised statements - that the price of a gram of this caliber is about 700 pounds, which is compared to 24, 21 and 18 calibers.

According to the latest announced prices, the price of 18 karat gold reached 896 pounds, 21 karat 1045 pounds, and 24 karat 1194 pounds.

As for the extent of the Egyptians' ability to buy this type of gold, Milad explained that there is no certainty within the division regarding the mass demand for 14 carat, and added, "People of the Middle East usually like bright yellow gold or high caliber such as 24 and 21."

14 karat gold contains 583.333 grams per kilogram, and the remainder consists of other metals such as copper, silver and platinum.

The uncertainty about the extent of demand for this type of gold jewelry will prompt officials to survey the community’s opinion before the actual production of 14-carat begins, according to what the official confirmed.

Rising prices

And in interaction with global events and local government measures, the gold markets have witnessed, since last February, a state of a significant rise in prices punctuated by a fluctuation between decline and rise throughout the day.

For his part, the former head of the Chamber of Gold Works in the Federation of Industries, Rafiq Abbasi, attributed the rise in gold prices to the increase in the volume of demand amid a decrease in the volume of supply in the local market.

The shortage of gold came as a result of a decision taken by the Central Bank of Egypt to tighten import procedures, last March, to preserve foreign currencies, as it stopped dealing with collection documents in the implementation of all import operations, and working with documentary credits only, which hindered the movement of supply from abroad.

Abbasi explained - in press statements - that the tightening of imports from abroad with the high demand locally led to a decrease in the volume of supply, which resulted in a discrepancy in the price of gold in the market, indicating that the discrepancy reached 300 pounds (16 dollars) per gram, before it gradually decreased to 100 pounds ($5) after lower demand.

He continued, "The price of gold before the tightening of import procedures was based on its price on the international stock exchange and the exchange rate of the pound against the dollar, in addition to expenses not exceeding 15 pounds per gram in return for transportation expenses and the profit margin of traders."

The Russian-Ukrainian war, which erupted on February 24, had major repercussions on the economies of countries, causing waves of inflation and negative effects on global stock markets.

Last March, the dollar's exchange rate rose against the pound by about two pounds, to record transactions at the end of last week of 18.53 pounds for buying and 18.64 pounds for selling.

And last February, the Central Bank of Egypt bought 44 tons of gold, which made it classified as the largest buyer of the yellow metal among global central banks during the first quarter of 2022.

A report issued by the Information Center of the Council of Ministers confirmed that the volume of gold rose by 54% to reach 125 tons by the end of February, which is equivalent to 17% of the total Egyptian reserves.

Egypt produces about 16 tons of gold annually from the Sukari mine in the Western Desert, according to statements by the Minister of Trade and Industry.

Egypt produces about 16 tons of gold annually (Pixaby)

previous experience

In 2016, the Ministry of Supply announced the adoption of 14-carat gold in the Egyptian market and the start of the production of gold crafts in an attempt to counter the high prices of gold jewels, which led to a wave of stagnation in the markets at that time.

But this gold standard did not meet the Egyptian customer's taste, and soon it was withdrawn from the market as a result of the lack of demand for it.

According to the head of the Stamping and Scales Department, the volume of 14-carat gold stamped, during January and November 2017, amounted to about 326 kilograms, compared to 30 tons of 18 and 21 karat, with a market share of not more than 1.8 percent.

Social media platforms have interacted with the news of the launch of 14 karat in the market, but the majority of comments were skeptical about the nature of this type of gold, as it contains a high percentage of copper.

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