22 April 2024 04:39 am Views - 615
Sri Lanka will see consumers hold back gold purchases as prices of the precious metal continue to expand globally, Sri Lanka Gem and Jewellery Association (SLGJA) said.
Amid rising geo-political tensions in the Middle East region and looming fears of an Iran-Israel war, gold prices continued to scale high for the sixth week in a row during the weekend despite rising US dollar rates.
Speaking to Mirror Business on the impact of global gold price hike on the island nation, Sri Lanka Gem and Jewellery Association Executive Committee Member (Gold Segment) and Lalitha Jewellers Managing Director Sellakumar Kandasamy said that gold prices in Sri Lanka will keep rising in the short term, and people will tend to hold back purchases for a while.
“The volume of purchases will reduce depending on the affordability factor. Locally, prices of 24 and 22 carat gold will go up between 7- 8 percent,” he said.
He pointed out that prices of commodities such oil and gold change due to multiple factors in the international market. It is highly complex and speculative.
Gold prices have risen between US$ 30-40 (per ounce) in recent days.
“Gold is an attractive investment and a means of savings. Locally the majority demand is for the 22 carat gold jewellery. It’s the fashion and design-oriented segments that go mostly for 18 carat jewellery,” Sellakumar added.
Meanwhile, with gold rates surging, the US dollar index is also scaling northward. The US dollar price has risen to a 5-month high and the US dollar index has managed to sustain above 106 levels, commodity market analysts noted.
According to the London Stock Exchange Group (LSEG), spot gold prices reached US$ 2,431.29 per Troy ounce -the highest rate ever recorded for the metal on Friday, April 12.
According to Gold Alliance, the highest price of gold ever recorded was US$ 2,152 on 3 December 2023. However, adjusted for inflation, gold reached its highest in 1980 with an inflation-adjusted price of US$ 2,429.84. Last Friday (April 19) saw prices reaching US$ 2,417.59 after Israel retaliated with an airstrike attack, a day before.
Analysts predict rates could surpass US$ 2,500 by the year if the geopolitical developments continue.
According to Everett Millman, a chief market analyst of Gainesville Coins in the US, as quoted by Reuters, the natural response by investors is to flee from gold when there are geopolitical tensions like at present.
“If the conflict further escalates, prices could go north of US$ 2,500-2,600, and if there is a ceasefire, then they could fall to US$ 2,200,” said Millman as quoted by Reuters.
As per the Central Bank of Sri Lanka, gold rates in Sri Lanka sat at Rs. 725, 226 per Troy ounce (31.1035 grams) as of Friday, April 19.