Gold prices sparkle - investors benefit
There has been a drop in sales due to the sudden increase in gold
prices which has hit a record high of US$ 1,000 an ounce, according to
A gold sovereign weighing 24 carats increased from Rs. 26,100 last
month to Rs. 27,400 due to the weakening of the US dollar and the surge
in world oil prices which has hit US$ 109 a barrel. Manufacturers who
attributed the sudden escalation in gold prices to the market recession
in the US and countries investing in gold for oil hedging said that a
sovereign may reach Rs. 30,000 by June.
They said that this is the best time to invest on an asset that is
safe, readily cashable and doesn't lose its value.
Chairman, Pattakannus (Pvt) Ltd., S.A. Thiagarajah said the rise in
gold prices has a negative impact on the turnover which has dropped by
50 per cent during the past four to five months.
Gold prices have been on the increase except when prices dropped 20
years ago resulting in a 20 per cent slump in sales.
A 24 carat sovereign dropped from Rs. 600 to Rs. 480.
Thiagarajah said when he started business in the 1960s a 24 carat
sovereign was Rs. 60.Gold prices have shot up to an unimaginable level
and jewellery buyers are compelled to order smaller quantities. "Banks
and those who buy in bulk will benefit with the increase in prices.
A 10 tola bar known as a biscuit is the minimum quantity that they
buy", he said. Waruna Manikdiwela, Branch Manager, Swarna Mahal
Jewellers, Wattala, said due to the increase in gold prices there is a
shortage of gold in the market. Investors are grabbing the opportunity
to gain big returns from banks.
"Gold prices are affecting our sales but there will be a demand
during the Sinhala Hindu New Year. If prices continue to rise we will
reduce labour and use machines", he said. People buy jewellery for
weddings, engagements, naming of a child and other important family
Corporates buy gold to reward service excellence and other
achievements. Sportsmen are rewarded with gold medals for their
The demand for gold is high during the festive period from April to
December and drops during the lean period from February to March.
The price of a 24 carat gold sovereign has been increasing from the
middle of last year.
The price increases are as follows; June Rs. 17,600, October Rs.
20,000, December Rs. 21,600 and March Rs. 27,000.
One troy ounce is equal to 3.89 sovereigns which is 31.10 grams.