Walid Farooq, a gold and jewelry journalist, said that 5 different factors will affect gold prices this year.
In statements to RT, he added that these factors include growth, inflation rates, monetary policy, geopolitical events and the role of the dollar, as the global economy slows down or is prone to stagnation, continued high inflation rates, the ongoing effects of the Russian-Ukrainian The crisis and military escalation between China and Taiwan will push the price of gold to significant levels above about $2,500 an ounce.
He pointed out that continued interest rate hikes by the US Federal Reserve will affect the decline in gold prices, but if the US Federal Reserve slows down interest rates, this will increase the strength of gold in 2023.
He explained that gold prices in world markets recorded a small increase of about two dollars, up 0.1%, during last year’s trading, as an ounce opened yearly trading at $1,828 and touched $2,069 on March 8. The aftermath of the Russo-Ukrainian war and the tendency of central banks to raise interest rates, and prices witnessed a wave of decline, reaching their lowest level in December, fixing around $1616, and from the beginning of November, prices rushed to a new wave of rise, for deals to be made at $1826.
He continued that the US Federal Reserve raised interest rates 7 times during 2022, including the months of March, May, June, July, September, November and December, and by 4.5%, which is the most serious wave of interest rate hikes since 1980s. .
Farouk pointed out that Banque Misr and Al-Ahly Bank have been offering savings certificates at 25% interest rate, which will not drive gold prices down as certificates were offered at 18% in 2022 and yet gold prices have risen by around 110% . at 876 pounds, as a gram of 21 carat gold opened annual trading at 799 pounds, and in December touched 1960 pounds, the highest level in Egyptian history, and closed annual transactions at 1675 pounds.
Farouk expected local gold prices to hold up this year if the pound continues to decline against the dollar, and a shortage of raw gold in the market with imports suspended, citizens refusing to sell what they have and strong demand to keep the value of money from the erosion of the currency.
He added that gold prices last year showed an unprecedented historical increase, despite a slight decrease in gold prices on the global stock exchange due to an 8% increase in interest rates by the Central Bank during the year, including 1% in March. 2% during and 2% in October and 3% in December to counter rising inflation as the Central Bank liberalized the exchange rate by “floating” the pound twice during the year, in March and October, so that the value of the pound in official banks decreased by 57%.
He continued, and the local market was subject to the accumulation of citizens in gold shops to buy bars and pounds, the desire to save and keep the value of their money from the fall of the local currency, with the decision to float and raise interest rates more than once during the year, which led to a large an increase in demand, a decrease in supply, and the emergence of a policy of delivering new bars instead of immediate delivery to delivery in terms of a week to a month.
Markets saw the suspension of pricing channels and platforms in May and December as a result of dealer manipulation of price spikes based on illusions of supply and demand, and pricing gold at around £37 in dollars. On May 6, 2022, and in December, the market witnessed an implicit agreement between factional gold dealers to stop pricing. Online, returning to the traditional method, and informing gold stores about prices over the “phone”, as inside the price divergence of the market to stop purchase and sale after price speculation, and state intervention in their limitation, so the market was subject to discrepancies in declared prices, and the sale of some at prices reached between them AND between the real price is about 50 pounds as a form of insurance.
He added that with strong demand for bullion and sterling, demand for artifacts has declined and artifact production by companies has fallen by 40% since the Central Bank decided in February 2022 to use documentary letters of credit in most imports. which led to a sharp slowdown in imports. Both the accumulation of goods in ports, and thus the import of gold from foreign markets, and the lack of foreign exchange in the local market, prompted some importers to buy bullion in pounds in order to export it abroad as a means of obtaining dollars, which exacerbated price growth, during the last quarter of this year the decision returned to
Dealing with last December, after gold became the local official currency as an alternative to the dollar, and investors from other sectors went to buy gold, and the situation turned into an auction, and break traders were directed to use increased demand and limit supply to raise prices.
In order to counter price speculation and the use of gold as a means of obtaining dollars, the Central Bank of Egypt has ordered gold exporters to return export proceeds from funds to the country within 7 working days from the date of shipment and, in accordance with the instructions, the customer, in case of non-compliance, is included in the lists of disadvantaged clients, and that in the future not to perform similar transactions for the client and the group.
Cairo – Nasser Hatem