Egypt bans gold purchases through consumer finance

The Financial Regulatory Authority has issued a ban on financing gold purchases through consumer finance companies. This regulatory move aims to mitigate credit risks, protect customers, and maintain the stability of the financing market.

Mohamed Attia El-Fayoumi, President of the Qalyubia Chamber of Commerce, noted that gold differs from standard consumer goods because it serves as a highly liquid investment and savings asset. Using consumer debt to purchase gold creates a gap between the intended purpose of the financing and its actual use, as customers often buy gold to benefit from future price increases rather than for consumption.

El-Fayoumi warned that gold price volatility could lead to defaults. If gold prices drop, customers may face a difficult financial situation where the value of their asset decreases while they remain obligated to pay off the financing installments. The ban is intended to prevent the expansion of financing tied to volatile investment assets.