What is a karat?
The karat tells you how much of an item's weight is pure gold. 24K is nearly pure, which makes it soft, so it is used mostly for bars. 21K is 21 parts gold out of 24, and 18K is 18 parts out of 24; the rest is other metals that make jewellery harder. The Egyptian gold pound weighs 8 grams of 21K.
How the theoretical price is worked out
Gold is priced globally in dollars per ounce, and an ounce is about 31.1 grams. So the price of a gram of pure gold in pounds is: ounce price in dollars × pounds per dollar ÷ 31.1. Multiply by the karat's share to get the 21K or 18K gram price.
So gold in Egypt can move for two different reasons: the global ounce moved, or the dollar changed against the pound. The two can also move in opposite directions and cancel out.
Why the shop price differs
The local price can drift from the theoretical one with supply and demand in Egypt. One measure is the "goldsmith dollar": the dollar rate implied by dividing the local gold price by the global price. If it is far from the bank rate, the local market is pricing gold at a premium or a discount. A shop also buys from you for less than it sells to you, and jewellery carries a making charge that varies from shop to shop.
Follow gold prices
The rates page shows each karat and the gold pound, and you can compare them with the ounce.
Check yourself
1. Pure gold is EGP 4,000 a gram. What is 18K worth in theory?
2. The global ounce did not move but the gram price in Egypt rose. What could explain it?
Summary
- The karat measures pure gold: 24K is nearly pure, 21K is 87.5%, 18K is 75%.
- Theoretical price = ounce in dollars × dollar rate ÷ 31.1 × karat share.
- The shop price differs because of the local market, the buy/sell gap and the making charge.