• Local prices lag behind global highs due to rupee appreciation
• Depreciation of LKR expected to drive up gold prices from June 
• Demand to sell gold increases with slight price uptick post New Year

Market sources expect gold prices in Sri Lanka to surpass Rs. 200,000 in the second half of the year once the Sri Lankan Rupee depreciates to around Rs. 320 against the US Dollar as forecasted.

Speaking to The Sunday Morning Business, Cash for Gold Ltd. Owner Ramzan Haneef revealed that local prices continued to lag behind the all-time high prices observed in the world market due to the drastic appreciation of the rupee observed this year.

He stated that in 2022, the price of gold in Sri Lanka had reached an all-time high of around Rs. 211,000 due to the drastic depreciation of the rupee, which fell to around Rs. 380 against the dollar. Accordingly, he claimed that if the rupee were to depreciate to around Rs. 350 again, in the backdrop of the current gold prices in the world market, local prices would easily exceed Rs. 250,000.

Haneef shared that they were expecting the rupee to start depreciating from June onwards, which would result in a parallel uptick in local gold prices as well.

“If the dollar reaches Rs. 310, the 22-carat gold prices will rise to around Rs. 200,000 and the 24-carat gold prices will rise to around Rs. 220,000.”

He further noted that due to the low prices for gold observed prior to the New Year, the demand to sell gold had decreased among the public. However, with the slight increase in local gold prices in the aftermath of the New Year, there has been a great demand to sell gold.

Speaking to several sources from the local gold market to ascertain the current prices of gold in Sri Lanka, The Sunday Morning Business learnt that as of Thursday (18), the price for 24-carat 8 grammes (one sovereign) was around Rs. 180,000-190,000 while the market rate for 22-carat 8 grammes (one sovereign) was around Rs. 168,000-170,000.

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 the increased demand for safe-haven assets.

Bloomberg reported that on 12 April, spot gold reached an all-time high of $ 2,431.52 and was at around $ 2,370 as of Thursday (18).

Bloomberg further reported that Deutsche Bank had raised its gold price forecast to an average of $ 2,400 an ounce for the fourth quarter of 2024 and to $ 2,600 for the fourth quarter of 2025, citing a durable impact from recent investment inflow. Its strategist, Michael Hsueh, saw tension in the South China Sea as a potential flashpoint that could garner greater attention for gold.