Gold & Silver Markets Shaken by Global Crash: Implications for Sri Lanka 📈

The global financial landscape witnessed a seismic shift as gold and silver prices suffered a sharp collapse, erasing an estimated US$ 3 Trillion in market value within 90 minutes. Driven by algorithmic selling and mass profit-taking, the "flash crash" has critical repercussions for Sri Lanka’s export-driven economy. • Market Breakdown & Volatility • Gold prices plunged to approximately US$ 5,135/oz, while silver fell to nearly US$ 109/oz. • Locally, 24K gold reached a milestone of Rs. 435,050 per 8g (1 sovereign) earlier in February before the correction. • The crash was accelerated by high-frequency trading and margin calls, impacting global liquidity. • Sector Impact & Exports • Gems & Jewellery: As a net importer of gold for manufacturing, Sri Lanka faces extreme volatility in working capital and inventory valuation. However, the sector showed resilience in 2025, with Diamonds, Gems & Jewellery exports estimated to grow 46.15% YoY (reaching US$ 23.91 Mn in Dec 2025). • Apparel & Textiles: Remained the top revenue driver, earning US$ 4.9 Bn in 2025 (+5.34% YoY). • Tea: Export earnings reached US$ 1.5 Bn (+4.97% YoY) in 2025. • Economic & Policy Outlook • Total exports for 2025 reached US$ 17.25 Bn (+5.6% YoY), with a US$ 20 Bn target set for 2026. • Global volatility pressures the Sri Lankan Rupee and complicates Central Bank reserve valuations, as gold is a key component of official foreign exchange reserves. • Experts advise a shift from price speculation to margin protection and design-based value addition for local stakeholders.