GOLD prices hit the roof this year. Never before has one gramme of 21 karat gold been sold at LE225 on the local market. Gold prices in the international market crept up from $850 per ounce -- one ounce is 31.1 grammes of 24 karat gold -- during 2009 and moved further up to $1,220 in the first quarter of the year before it hit $1,385 in December. "The slow pace of economic recovery and fear over Europe's debt crisis ignited a gold purchase spree not only among individuals and financial organisations but also among governments. Gold continues to be considered a safe hedge against financial uncertainties," said Rafik El-Abbasi, head of the gold division at the Egyptian Federation of Chambers of Commerce. El-Abbasi added that China, the world's biggest producer and second largest user of gold, alone purchased 191 tonnes of the precious metal near the beginning of the year. Soaring gold prices have been detrimental to gold manufacturers and retailers. Demand for jewellery on the local market was hit the most as it registered a decline of 35 to 40 per cent compared to last year. "In an attempt to mitigate the negative impact, manufacturers have started to produce much lighter items. Much cheaper nine and 14 karat gold were also introduced, but neither was warmly received by the end consumer, who mainly seeks value for money," said El-Abbasi. Nevertheless, investors could not be happier. The value of gold has been increasing by 25 per cent year on year since 2005. "Where else can one get a 25 per cent return on investment?" asked El-Abbasi. This is perhaps the main reason why out of the 2,500 tonnes of gold produced annually in the international market, the bulk is sold as bullions. On the production front however, 2010 was a great year for Egypt. For the first time in Egypt's modern history, an estimated 3.5 tonnes of gold and silver were produced during the year. New gold discoveries in the Sukkari goldmine, 25 kilometres southwest of Marsa Alam in the Eastern Desert, has put Egypt among the top 10 countries in terms of proven reserves following China and South Africa. According to Mustafa El-Bahr, chairman of the Egyptian Mineral Resources Authority (EMRA), proven gold reserves are estimated at 14.5 million ounces with a market value of no less than $20 billion. Sukkari is among 120 goldmines that have been known since Pharaonic times. So far, other 40 new goldmines have been mapped. "The new discoveries have attracted international companies and new concession areas to dig for gold will be announced next year," said El-Bahr
