Gold price hits record high

The gold price hit an-all time high on Thursday (09) with the price of 24 -carat gold sovereign reaching Rs.100,000 for the first time in history. According to the Colombo Gold Rates, as at yesterday, 24-carat gold sovereign was recorded at Rs. 100,000,22 -carat gold sovereign was at Rs. 91,700 and 21-carat gold sovereign was recorded at Rs. 87,500. On Wednesday (08) price of an ounce in the global market exceeded $1,800, with the precious metal benefitting from its haven status as the coronavirus outbreak triggers global economy fears. According to foreign media reports, a hike in the prices of gold is reported after 2011, with an increase of 40% in the past 14 months. Meanwhile speaking exclusively to Ada Derana, Indika Bandara- Assistant Director – National Gem & Jewellery Authority expressed the following: “There is a shortage of gold in the market. There is a decline in gold reserves. Currently, a lot of foreign investors are starting to invest in gold. However, there is a decline in the gold supply as well. Moreover, the gold auctions carried out by the banks have been halted and gold importation has been blocked. Accordingly, the gold price has risen sharply” Meanwhile, the Senior Deputy Governor of the Central Bank Dr. Nandalal Weerasinghe also expressed the following whilst addressing the monetary policy meeting in Colombo yesterday (09): ” There is no decline in gold reserves. I think the Monetary Board took a decision on the basis of strategic asset allocation in our reserve management, a prudent level of gold reserves compared to the total number of amount reserves is around 3%-5%. But, because we have bought gold reserves from 2010 onwards when prices were low, our share of gold reserves compared to the total reserves were close to 15%. Therefore, the problem that we could not sell those reserves was because prices were coming down and we cannot sell at a loss. So, as a result, whenever the gold prices are coming back again, the Monetary Board took a decision that we would bring our level of gold in our composition to a much more prudent level of approximately 5%. So, as a result, when prices were going up we have disposed of certain parts in the global market and we are maintaining a prudent level of gold in our reserves.”

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