• Local gold prices surge by 10% due to global market trends, rupee depreciation
• 24-carat gold reaches Rs. 198,000 before slight decline
• Gold prices largely unaffected by Vesak, unlike Christmas

Local gold prices have gained by around 10% over the past few weeks due to world market prices continuing to reach new all-time highs and the slight depreciation of the Sri Lankan Rupee against the US Dollar observed since end-April, according to market sources. 

Speaking to The Sunday Morning Business on Wednesday (22), Cash for Gold Owner Ramzan Haneef revealed that over the past few weeks, the price for 24-carat 8 grammes (one sovereign) had increased from around Rs. 180,000 to a peak of Rs. 198,000 amidst the depreciation of the Sri Lankan Rupee and the appreciation of gold prices in the world market.

However, he noted: “After increasing, the gold prices have dropped by around Rs. 2,000 today (22). Our buying price today for 22-carat is Rs. 177,000 and Rs. 195,000 for 24-carat.”

According to him, the constriction in gold prices on Wednesday was due to the recent appreciation of the Sri Lankan Rupee.

He further stated that historically, local gold prices were not affected by the Vesak season, and except for the Christmas season, local gold prices were largely insulated from seasonal effects.

Gold, which is considered a hedge against inflation and a haven during periods of political and economic uncertainty, has seen its price in the world market surge by over 15% since the turn of the year. 

Experts believe that this surge can be attributed to escalating tensions in the Middle East, anticipation of interest rate cuts in the US, substantial Central Bank purchases, and increased demand for safe-haven assets.

In the world market, spot gold reached a new all-time high of $ 2,449.89 on Monday (20). However, gold prices have since been on a downward trend following the announcement by the US Federal Reserve that its policy response for now would involve maintaining the US central bank’s benchmark policy rate at its current level. 

Furthermore, the release of the minutes of the Federal Open Market Committee revealed the possibility of further interest rate hikes. 

Prior to the preceding week, the average buying Telegraphic Transfer (TT) rate published by the Central Bank of Sri Lanka (CBSL) had been on an uptrend over the previous few weeks after falling to a low of Rs. 291.5 on 29 April. 

However, over the preceding week, the buying rate has gradually settled at around Rs. 194.8 after peaking at around Rs. 297.3 on 16 May. 

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