Gold prices declined significantly, both globally and in Sri Lanka, following a temporary easing in trade tensions between the United States and China.
On May 12, global gold prices dropped more than 3%, marking the largest single-day decline of 2025. The fall was driven by a 90-day agreement between the US and China to reduce tariffs—U.S. duties were lowered from 145% to 30%, while China reduced its tariffs from 125% to 10%. The easing of trade tensions reduced demand for gold as a safe-haven asset, prompting investors to shift to equities and other riskier investments.
As of May 14, spot gold traded at about $3,226 per ounce, with $3,200 viewed by analysts as a critical support level.
Sri Lanka’s domestic gold market followed suit. In Colombo’s Pettah market, the price of a 22-carat gold sovereign dropped to Rs. 240,500 on May 14, down from Rs. 246,000 on May 10. The price of a 24-carat sovereign also fell, declining from Rs. 266,000 to Rs. 260,000 over the same period.
Analysts indicated that while the short-term outlook for gold remains weak due to improved trade conditions, potential shifts in central bank policies and lingering geopolitical risks could influence future price movements. (Newswire)