Gold prices surge over Rs.4000 per pound

Gold prices in the local market have surged by Rs. 4,000 – 5,000 per pound after the Sri Lanka slapped a 10% tax on gold imports, the Gem and Jewellery Authority says.

However, lankabusinessonline.com quoted deputy Treasury Secretary S R Attygalle as to saying that the tax imposed from mid-night last night was expected to be temporary.

India had imposed an 8.0 percent tax earlier.

Last week, Central Bank Governor Nivard Cabraal said that Sri Lanka's gold imports surged to 100 million US dollars in the first four months of the year from about 150 million for the full year 2012.

Some industry watchers had believed that Sri Lankan gold traders were suspected of earning profits importing gold and smuggling it to India. Analysts say the profits will now be earned in Singapore or Dubai, the website added.

The tax will also keep domestic gold prices up and maker Sri Lankan made jewellery less competitive to tourists than earlier.

World gold prices have fallen to around 1,303 US dollars an ounce from 1,700 levels last year as the US dollar strengthened.