Demand for gold declines

Lalin FERNANDOPULLE

The gold market is severely affected by the global financial crisis creating low demand for products, said gold manufacturers in Colombo. “The demand for gold declined sharply during the past six months due to surge in gold prices.

Investments in gold have increased due to the depreciation of the US dollar” manufacturers said. Wattala Branch Manager, Swarna Mahal Jewellers, Waruna Manikdiwela said local gold prices are linked to international prices.

More investment on gold than on the US dollar is the reason for the sharp hike in gold prices.

Gold prices per sovereign rose from Rs. 22,000 to around Rs. 28,000. Gold prices are expected to further increase with the US economic crisis worsening.

“The market may improve during the festive season and in May which is an auspicious month for weddings”, Manikdiwela said.Managing Director, Pattakannus (Pvt) Ltd., S. A. Thiagarajah said the increase in the VAT from 5 per cent to 10 per cent has an adverse impact on the prices.

“Sales have dropped due to the financial crisis and as a result sustaining businesses is a major challenge”, he said. There is no marked difference in sales during the festive season other than during the ‘Akshayathruthi’ a Hindu Tradition associated with the purchase of gold that takes place on April 27.

According to Ceybank Gold Shop of Bank of Ceylon 10 T Bars are priced at Rs. 405,500 each.