Sri Lanka’s gold market sees price volatility 04 Jan 2026

• Local gold prices pass historic milestone in ’25
• 24 carat 8 g (1 sov.) reaches Rs. 370,000
• 22 carat 8 g (1 sov.) reaches Rs. 338,000
• Gold surges 66% in 2025

Price volatility dominated the local gold market during the final week of 2025, as the curtain closed on a historic year for the gold market, which saw local gold prices pass the milestone of Rs. 400,000 for the first time in history.

Speaking to The Sunday Morning Business, Inamul Hassan from We Buy Gold revealed that on 26 December 2025, local gold prices had increased sharply, which saw 24 carat 8 g (1 sovereign) reaching Rs. 370,000 and 22 carat 8 g (1 sovereign) reaching Rs. 338,000. 

However, he noted that prices remained below the historic high of Rs. 410,000 for 24 carat 8 g (1 sovereign) recorded earlier in the year, around 18 October 2025.

Commenting further, he stated that on Tuesday (30 December) gold prices fell sharply before recovering and that as of Thursday (1), 24 carat 8 g (1 sovereign) was at Rs. 355,000 and 22 carat 8 g (1 sovereign) was at Rs. 327,000.

Commenting on the reasons for recent volatility in gold prices, Hassan stated: “The sharp fall in prices was because the Vietnam central bank had sold some gold at low prices to the world market. The increase in prices during the previous week was because China had brought large quantities of gold from the world market.”

According to Reuters, spot gold prices recorded their steepest single-day decline since 21 October 2025 on Monday (29 December), retreating from the record high of $ 4,549.71 reached on 26 December amid investor profit-taking following recent rallies. 

However, prices recovered by the end of the week as market attention shifted back to geopolitical and economic risks, reigniting gold’s rally and capping its strongest annual performance since 1979.

One of the key factors driving gold higher as a safe-haven asset during the preceding week was growing scepticism over the prospects of a Russia–Ukraine peace deal, following accusations by Russia that Ukraine had attempted to attack President Vladimir Putin’s residence, an allegation Ukraine denied, describing it as baseless. 

Speaking to Reuters, Zaner Metals Vice President and Senior Metals Strategist Peter Grant stated: “The market remains sceptical of the Russia-Ukraine peace deal, and the broader measures of geopolitical risk remain elevated.”

Reuters noted that gold surged 66% in 2025, its steepest annual rise since 1979, driven by a confluence of interest rate easing, heightened geopolitical tensions, strong central bank buying, and increased inflows into bullion-backed ETFs. 

“The US Federal Reserve agreed to cut interest rates at its December meeting only after a deeply nuanced debate about the risks facing the US economy right now, according to minutes of the latest two-day session. The Fed next meets on 27-28 January, with investors currently expecting rates to be left unchanged,” Reuters noted.

Source: The morning