Dollar appreciates, gold hits new low

By Lalin Fernandopulle

The drop in gold prices in the global market will last for around six to seven months due to the revival of the US economy and the appreciation of the dollar, said local gold merchants.

They said that whenever the value of the dollar rises the demand for gold drops resulting in a slump in prices.Pattakannus (Pvt) Ltd, Chairman S.A. Thiagarajah said that the prices of gold have not been reduced by Sri Lankan banks despite the drop in prices in the global market.

The price of an ounce of 24-carrot gold has dropped to around US$ 1,130 from around US$ 1, 275 last week.

The price of 24-carat gold in Sri Lanka is around Rs. 44,900 per sovereign at present.

Gold experts said that one of the main reasons for the drop in gold prices was China disposing of the vast amount of gold it purchased last year. China is said to have bought around 2,000 to 4,000 tonnes of gold in 2013.

According to reports, on Friday, gold prices headed for its biggest weekly drop since May with strong US economic data and rising equity prices hurting investor sentiment.A Federal Reserve meeting in July revealed that policy makers had debated whether they should raise interest rates earlier due to a recovery in the job market.

The S and P 500 advanced sharply.

The yellow metal which is an asset during economic turmoil sank to US $1,273 a troy ounce on Thursday, a two-month low.

On Friday gold was down 0.2 percent at US $1,275 a troy ounce and headed for a weekly loss of 2.2 percent, reports stated.