Higher Gold Prices Impact Zakat Calculations During Ramadan Season

Here’s a rewritten version of the article in a neutral newsroom style:

Zakat Obligations Remain Unchanged Amidst Ramadan Fasting

As Muslims around the world observe the fasting month of Ramadan, many are also preparing to fulfill another essential pillar of their faith: giving zakat. Zakat is a compulsory form of charity in Islam, aimed at supporting the needy and promoting economic equality.

The price of gold has nearly doubled since last Ramadan, from approximately $2,900 per ounce to over $5,100 today. This change affects zakat in two ways: it increases the eligibility threshold (nisab) for some individuals, meaning they may be exempt from paying zakat, and it also increases the monetary amount owed based on one’s gold holdings.

Zakat is one of the five pillars of Islam and is mandatory for adult Muslims whose wealth exceeds a certain threshold. The nisab threshold is currently equivalent to 85g (3 troy ounces) of gold or roughly $15,000 based on current market prices. This amount can be calculated using either the gold standard (20 mithqals or 7.5 tolas) or the silver standard (595g or 19 troy ounces).

For those whose wealth remains above this threshold for a full lunar year, zakat is due at a fixed rate of 2.5 percent (one-40th) of their eligible wealth. The calculation of zakat owed on gold items requires knowledge of both the item’s weight in troy ounces and its purity in karats.

Different Islamic schools of thought have varying interpretations regarding the application of zakat to wearable jewelry versus stored investment gold. In general, however, individuals are required to calculate their zakat based on the current market value of their gold holdings, rather than the original purchase price.

A calculator is available for those who wish to calculate their zakat owed on gold items.

Source: Al Jazeera