Gold Price Fluctuations and Monetary Policy in Egypt and Malaysia: An Islamic Economics Perspective

Abstract

Objective: This study aims to examine the effects of global gold price fluctuations on monetary policy in Egypt and Malaysia within the framework of Islamic economics. It seeks to understand how central banks respond to gold market volatility while adhering to Shariah principles, including wealth preservation, justice, and financial stability. Theoretical framework: The research is grounded in Islamic economics, particularly the Maqasid al-Shariah, emphasizing the protection of wealth (Hifz al-Mal) and equitable economic practices. Conventional economic theories on commodity prices and monetary policy complement the framework to enable a comparative analysis. Literature review: Previous studies highlight gold’s role in hedging against inflation and stabilizing currencies. Research in Islamic finance emphasizes gold as a Shariah-compliant store of value. However, comparative studies linking global gold prices to monetary policy in Islamic countries are limited, especially for Egypt and Malaysia. Methods: A mixed-methods approach is applied, combining time-series econometric analysis of monetary indicators with a qualitative review of central bank policies and Shariah compliance guidelines. Results: Findings suggest that gold price fluctuations influence monetary policy decisions differently in Egypt and Malaysia, reflecting variations in economic structure and Islamic finance integration. Gold functions as a stabilizing asset and a hedge against currency risk within Shariah-compliant frameworks. Implications: The study offers guidance for policymakers in Islamic countries on incorporating gold into monetary policy to achieve financial stability and Shariah compliance. Novelty: This research is original in its comparative focus, linking gold market volatility to practical monetary policy while integrating Islamic economic principles, addressing a gap in current literature