Gold shops have cut the workmanship charges on finished jewelry by 20% to 30% in a bid to boost sales, as consumers increasingly favor bullion over jewelry amid economic uncertainty, industry sources told Al Manassa.
Demand for gold bars and pound-coins jumped to about 70% of total gold sales in October, up from around 20%, while demand for finished jewelry declined sharply, according to three sources at the Federation of Egyptian Chambers of Commerce and a gold manufacturing company.
Hany Milad, head of the federation’s General Division for Gold and Jewelry, said a number of traders offered discounts on jewelry-making charges to stimulate sales, amid strong demand for bullion and its limited availability in the current period.
Milad told Al Manassa that demand for bullion represents about 70% of total demand for gold, while demand for finished jewelry makes up the remaining share, noting that this trend is not economically sound.
He said long-term investment in gold benefits consumers more when they buy finished jewelry, because it combines investment value with utility value, as jewelry can be worn while also benefiting from rising prices over time.
Milad expected the price of 21-karat gold to reach 8,000 Egyptian pounds ($170) per gram if global market prices continue to rise, but said the final local price remains primarily tied to the level of domestic demand.
Lotfy Moneib, deputy head of the Gold Division at the federation, agreed, confirming that cutting workmanship charges aims to increase sales. “That’s normal because everyone is heading to bullion, so sometimes shops give up part of their profit as compensation, or to clear out some models, as happens in clothing sales,” he added.
Workmanship charges vary by design, production scale and origin, with locally produced standard pieces competing alongside imported jewelry, Moneib said, adding that pricing policies differ from one trader to another.
Last Tuesday, global gold prices jumped by more than 6%, marking the metal’s biggest daily gain since 2008, after the ounce reached about $4,951, up from $4,664 at the start of trading the same day. Locally, the price of 21-karat gold rose to 6,715 pounds per gram, up from 6,575 pounds last Monday.
In 2008, gold futures prices recorded their biggest-ever daily increase of about 11.6% during the global financial crisis.
Karim Suleiman, former marketing manager at Gold Era, a company specializing in gold manufacturing, and the owner of a shop in the Al-Sagha area of Al-Gamaliya, said jewelry making charges have fallen by 20% to 30% to between 190 and 250 pounds per gram for 21-karat gold, and between 250 and 300 pounds per gram for 18-karat gold.
Suleiman told Al Manassa that cutting workmanship charges on gold jewelry is one solution to encourage buying, amid high prices and a relative market slowdown for finished jewelry in the current period.
