By: OrePulse

Gold prices in Egypt climbed over the past two weeks even as international bullion fell, as a weakening Egyptian pound widened the gap between local and global gold prices.

Egypt's 21-karat gold, the country's most widely traded grade, rose about 2.2 percent in under two weeks to reach 6,390 Egyptian pounds per gram on Wednesday morning, up 140 pounds from its level on October 17, according to Masrawy. The figure excludes jewelry-making charges. Over the same period, international spot gold fell roughly 3.3 percent, trading at about $4,030.20 an ounce on Wednesday, down from about $4,166 on October 17.

The divergence tracked a sharp slide in the Egyptian pound. The dollar rose from about 53.45 pounds on October 17 to 56.20 pounds on October 27, a gain of roughly 5.1 percent. The pound breached the 56-pound-per-dollar level on October 26 amid what was described as heightened financial-market uncertainty.

The Federation of Egyptian Industries' Gold and Precious Metals Division, headed by Ehab Wassef, reported that 21-karat gold rose 1.63 percent in the week ending October 17, climbing from 6,150 to 6,250 pounds per gram, then gained another 0.5 percent the following week to reach 6,280 pounds, even as international bullion fell a reported 4.1 percent over that week. The Egyptian gold-pricing platform iSagha calculated a similar 1.54 percent rise for October 10 through October 17, using a slightly higher opening price.

iSagha executive director Saeed Embaby attributed the gap between domestic and international prices to the combined effects of international bullion movements, the exchange rate and domestic pricing mechanisms.

The currency pressure coincided with renewed foreign selling of Egyptian government securities and volatility in domestic equities, though no figures were given for either.

A rough calculation based on the October 17 and most recent international prices and exchange rates put the rise in gold's pound-denominated value at about 1.7 percent, below the 2.2 percent increase recorded domestically, a gap that could not be fully explained without further detail on transaction timing, pricing conventions and local premiums.

A stronger pound or a deeper decline in global prices could narrow or reverse Egypt's recent domestic gold gains. The Central Bank of Egypt's monetary policy committee was scheduled to meet on Thursday, October 29, a day after the U.S. Federal Reserve's own interest-rate decision. Egypt's overnight deposit and lending rates stood at 19 percent and 20 percent, respectively.