- Gold prices fall by Rs. 10,000 in 2 weeks due to exchange rate recovery
- World gold prices continue to climb amid Middle East tensions, nearing record highs
- Local jewellers report lower levels of gold sales despite high prices
Despite the high gold prices on offer in the world market, prices in the local gold market have been trending downwards during the past two weeks due to the appreciation of the exchange rate, market sources claim.
Speaking to The Sunday Morning Business, Ran Lanka Gem & Jewellery Ltd. Owner Imthiyas Haneef stated that despite the historic highs observed in the world gold market, prices in the local gold market had been trending south sharply following the election of Sri Lanka’s new President.
Accordingly, prices have fallen by around Rs. 10,000 as a result of the reduction of around Rs. 10 observed in the Sri Lanka Rupee to US Dollar exchange rate.
He claimed that as of Thursday (3), the price of 24 carat 8 g (1 sovereign) of gold had fallen to around Rs. 205,500 from around Rs. 215,000 recorded the previous week. Similarly, the price of 22 carat 8 g (1 sovereign) had fallen to around Rs. 189,000.
Speaking to The Sunday Morning Business, Cash for Gold Lanka Owner Chamil Indika also revealed that after peaking in the immediate aftermath of the Presidential Election, spot gold prices in the local market had been on a steep decline due to the sharp appreciation of the exchange rate.
Accordingly, he revealed that as of Thursday (3), the price of 24 carat 8 g (1 sovereign) of gold had fallen to around Rs. 206,000 from around Rs. 213,000 recorded the previous week. Similarly, the price of 22 carat 8 g (1 sovereign) had fallen to around Rs. 188,000.
Commenting further, Indika revealed that while people continued to sell gold at such high prices, the levels offered for sale were considerably low compared to levels observed during previous years, particularly in the immediate aftermath of the economic crisis.
Leading up to and in the immediate aftermath of the Presidential Election on 21 September, the exchange rate fell by around 2% as per the average buying and selling Telegraphic Transfers (TT) exchange rates published by the Central Bank of Sri Lanka (CBSL), which saw the selling rate of a US Dollar fall from Rs. 303.8 on 9 September to around Rs. 309.3 by 23 September.
However, since then the exchange rate has started to recover, which saw the selling rate of a US Dollar improve to around Rs. 299.3 by 2 October.
Spot gold prices have been trending north sharply over the past few weeks amid fears of further escalation in the Middle East, including retaliation by Israel.
According to Reuters, the bullion has climbed over 28% so far this year and is currently just below its record high of $ 2,685.42 per ounce set on 26 September. “It’s very reasonable to see prices go north of $ 2,700 per ounce if Israel does in fact strike Iran,” Reuters reported.
Bullion is considered a safe investment during times of political uncertainty and thrives in a low interest rate environment.