Gold prices surge cripples Sri Lanka’s jewellery industry
Sri Lanka is seeing a dramatic upheaval in its jewellery and gold sector. While abroad global uncertainty and inflation drive gold prices to new heights, the domestic market is struggling under home-grown demand in a free fall. Small-scale artisan livelihoods are on the line, and the overall economy might be taking a pounding with the trickle-down effects.
The price of a 22-carat gold sovereign in the Pettah gold market rose to Rs. 379,200 on Friday compared to Rs. 211.500 in the same month of 2024 while the price of 24-carat gold sovereign has risen to Rs. 410,100 on Friday from Rs 230,750 in October 2024, All-Island Gem and Jewellery Association’s Raman Balasubramaniam said.
Jewellery
Such elevated prices have strangled affordability. Observers and trade bodies report that domestic gold jewellery demand may have plunged by more than 50 per cent.
A leading Pettah trader said: “If order volumes continue falling, maintaining today’s staff levels is untenable, and retrenchment
is inevitable.”
This sector in Sri Lanka is estimated to employ around 300,000 people, making it one of the country’s largest traditional industries, official data revealed. With sales collapsing, many workshops are cutting shifts, laying off artisans, or scaling down operations entirely.
Pettah’s famed Sea Street, the heart of Sri Lanka’s gold shopkeepers, reports days without buyers. A longtime trader who wished to remain anonymous, laments: “In 20 years I’ve never seen a September like this. Foot traffic is gone. We’re lucky if we sell a ring a week.”
Not only business owners, but even skilled goldsmiths, polishers, and supply-chain workers whose livelihoods are dependent on constant orders, have a human cost.
The weakening demand is threatening both foreign exchange inflows as well as local economic activity. Sri Lanka’s gems, diamond, and jewellery sector had earned close to US$ 282 million in exports in 2024.
With diminishing domestic margins, producers have the tendency to divert capacity to export lines but even exports are facing cost pressure, taxation, and foreign competition.
Sri Lanka’s jewellery sector used to complain bitterly about heavy tax. Locally made jewellery and gold coins imported are both placed under 18 per cent Value-Added Tax (VAT) since January 2024.
Many artisans are turning to odd jobs; some relocate to other industries; others hope for a seasonal rebound. But with gold prices unlikely to fall sharply in the near term given the ongoing global demand for safe-haven assets this slump may be protracted, they added.
Hitad.lk has you covered with quality used or brand new cars for sale that are budget friendly yet reliable! Now is the time to sell your old ride for something more attractive to today's modern automotive market demands. Browse through our selection of affordable options now on Hitad.lk before deciding on what will work best for you!