The demand for buying gold increased by more than 30% during 2023 compared to 2022 (Al Jazeera)

Cairo -

The gold markets in Egypt are witnessing a state of confusion, after the authorities arrested a number of major gold traders, under the pretext of manipulating and igniting prices, in addition to accusing them of storing bullion, and being responsible for the rise in the dollar, by buying it to secure the gold market’s needs for imports of foreign raw materials. As well as fulfilling international obligations to major merchants and their counterparts abroad.

On the other hand, merchants believe that the government is seeking to crack down on them to stimulate its sales of high-interest bank certificates, which have not achieved the expected demand, according to observers, as a result of the Egyptians’ preference for possessing gold over certificates.

This is on the one hand, and on the other hand, the gold investment fund that the government launched in the middle of last year, in turn, did not achieve the desired success, which prompted the government to take recent measures to curb this growing demand in light of the deterioration of the value of the currency, according to those traders.

Huge transactions

According to an official report issued by the Stamps and Weights Authority, transactions in the gold market reach more than 65 tons annually, led by gold jewelry, which constitutes more than 90% of the size of this market.

According to press statements by the head of the department, Abdullah Montaser, 80% of the volume of gold in Egypt is locally manufactured, while imported gold represents 20% of the market volume, at a time when large quantities of adulterated and unstamped gold are widespread in the market.

The price of gold jumped about 90% during the year 2023 in Egypt (Al Jazeera)

The demand for buying gold increased by more than 30% during the year 2023 compared to the year 2022, according to official data, as a safe haven in light of the economic troubles that Egypt is suffering from and the decline in the exchange rates of the pound.

Gold bullion and pounds had the largest share of this increase, while the demand for purchasing gold jewelry declined, reaching about 1.7 tons, compared to 5.5 tons in the same period last year.

The price of a gram of 21 carat gold, which is the most traded in Egypt, has been fluctuating up and down for days around 4,000 pounds ($130 according to the official price, and approximately $60 according to the parallel market for the dollar).

Official authorities accuse major gold merchants of manipulating prices, especially after stopping imports. These are accusations that have confused the market and forced stores to close, causing thousands of workers to lose their sources of livelihood, according to observers.

Official authorities accused some major merchants of resorting to exporting large quantities of gold abroad to obtain the dollar, while merchants accused the government of the same accusation.

Traders considered the accusations "an attempt to look for a scapegoat for the government's failure to solve the dollar crisis, especially since all gold import and export operations take place through official frameworks."

Drawn accusations

Secretary General of the Gold Division of the General Federation of Chambers of Commerce, Najib Najib, rejected the accusations against gold traders, because “no evidence was presented to prove their authenticity.”

Citizens flocked to gold to hedge against the fall of the pound and as a safe haven (Al Jazeera)

Naguib said, "Gold is a very sensitive global commodity, not a local one. It is linked to a number of considerations, such as oil prices, the dollar, global stock exchanges, international events, and the economic situation of each country."

Naguib adds that local merchants, regardless of their weight, cannot control prices in light of the dominance of supply and demand mechanisms, denying in an interview with Al Jazeera Net that merchants are responsible for the record high prices.

Naguib believed that the failure of the Gold Fund’s experience to play an important role in the gold market, and even the desire of many sectors to buy gold as a safe haven in a time of economic turmoil, is behind the campaign against gold traders.

The spokesman added, "But the gold market may be behind the rise in the dollar, in light of merchants' desire to buy the American currency to secure the market's needs for production requirements, as well as transactions with international markets," indicating that merchants are also victims of the dollar crisis, due to the banks' inability to meet their needs. of hard currency needed to secure their imports.

He considered that the accusations directed at gold traders will not end the crisis, but rather will raise prices, given that closing hundreds of stores and stopping pricing will exacerbate the problems in the gold market in general.

The secret is in the box

In turn, Mansour Rifai, a member of the Gold Division in the Chamber of Commerce, believed that the security campaign against traders reflects the desire to control the market, which began with the establishment of the Gold Fund last May, in light of the lack of successes expected from it in controlling the market, in addition to the failure of certificates. High-interest banks collect huge sums, to continue betting on gold as a safe haven.

He added that the government is always looking for a scapegoat for its failure to solve the dollar crisis, adding in an interview with Al Jazeera Net that it "found the solution in accusing gold traders of responsibility for the rise in gold and dollar prices."

An Egyptian expert confirmed that 90% of the gold industry is local, in addition to Egypt playing an important role in the regional and international gold market (Al Jazeera)

Rifai strongly mocked the accusation that merchants were responsible for the rise in the dollar, stressing that the Central Bank controls the exit of dollars to importers and merchants, and therefore it is illogical to hold merchants responsible for the rise in gold prices and the decline in the value of the pound, stressing that the campaign against merchants will exacerbate the crisis.

The spokesman expressed his astonishment at the frequency of accusations such as “finding quantities of gold bullion, dollars, and large sums of money with merchants,” wondering with astonishment, “What will merchants keep other than these things?” He considered that the accusations harm investment and the market, stopping sales and making pricing difficult, as he put it. .

The economic expert, professor at the Faculty of Commerce at Al-Azhar University, Ahmed Dhikrallah, attributed the campaign against merchants to the desire to find a scapegoat for failure to resolve crises that were exacerbated by a decline in remittances from Egyptians abroad by more than 30%, and a decline in Suez Canal revenues by 42%, as a result of the events.

Zikr Allah revealed the government’s attempts to enter the gold market recently. It resorted to printing billions of pounds to buy and export gold, to confront the dollar scarcity crisis. When traders discovered the failure of the bet on selling gold for the collapsed Egyptian pound, they refused to deal with attempts to control the market, and the government responded with intense campaigns against them. , in a method that has proven to fail.

The economic expert refused to accuse traders of being responsible for the rise in the dollar as a result of their desire to buy it from the parallel market to meet their imports of operating requirements, stressing in an interview with Al Jazeera Net that 90% of the gold industry is local, in addition to Egypt playing an important role in the regional and international gold market. It has become an important supplier to some Gulf markets, according to Central Bank figures, whether of gold or precious stones, as they are sources of the dollar, and not a cause of its crisis.

Zikr Allah pointed out that the attack on merchants is a response to the failure of the government gold fund to collect billions of pounds, and the reluctance to do so, as well as the failure of official attempts to control the market, and the failure of attempts to alleviate the severity of the crisis, with measures such as selling assets, citizenship, and the initiative for cars for Egyptians abroad, as well as certificates. Banks with an estimated interest rate of 27%.

He concluded by saying that the continued desire of Egyptians to buy the dollar and gold from the parallel market, as a safe haven, prompted the authorities to play the card of security strikes, perhaps bringing the major gold traders back into the fold.

Source: Al Jazeera