Gold price hikes put Zakat payers in trouble

The holy month of Ramadan, a month of mercy, forgiveness and salvation, is underway. As the Arabic month begins, many Muslims around the world are preparing to observe one of the essential pillars of Islam, which is the payment of Zakat.

Zakat is an obligatory charity in Islam. Its aim is to help the needy and maintain economic equality. While many choose to pay Zakat during Ramadan in the hope of spiritual reward, it can be paid at any time of the year.

Zakat is calculated in terms of highly valuable assets, such as gold and silver. The price of gold has almost doubled since last Ramadan; it rose from around $2,900 per ounce to more than $5,100 today (February 25). This price increase affects Zakat in two direct ways: First, it changes the threshold for eligibility to pay Zakat, or Nisab, which means that many individuals may now be exempt from paying Zakat. Secondly, the amount of money given increases based on the gold one has deposited with him, which helps to increase the overall amount of charity.

With this visual explanation, we will answer some common questions about Zakat that will help you understand its purpose, calculation, and types.

What is Zakat and Sadaqah

Zakat is one of the five pillars of Islam, which has made it a core act of worship. The word Zakat means purification or increase. Zakat is enjoined in the Holy Quran as a means of purifying wealth, maintaining social justice, and helping the needy.

Zakat is obligatory for Muslims who have a Nisab amount of wealth and have to give a certain portion of their wealth every year (2.5 percent or one-fortyth). Details on its calculation are given below.

Sadaqah, on the other hand, is a voluntary donation that can be given at any time and in any amount.

For whom Zakat is obligatory

Zakat is obligatory or obligatory for adult Muslims whose wealth is Nisab or more. Nisab is the minimum amount of wealth required to be eligible to pay zakat.

This year, the Nisab is the equivalent of 85 grams (3 troy ounces) of gold, which is about $15,000 at current market prices. Last year, the Nisab was about $8,000.

Although 85 grams is widely accepted as the modern standard according to many organizations, the classical weight is 20 mithkals or 7 and a half tolas (an ancient unit of gold), which is equal to about 87.48 grams.

In addition to gold, there is also a silver standard for determining the Nisab. In the case of silver, the Nisab is 595 grams (19 troy ounces). It is determined taking into account different economic conditions, so that people of different levels can participate in the Zakat process.

If a Muslim's wealth exceeds this Nisab for a full lunar year, he is required to pay Zakat.

How Zakat is Calculated

The general rate of Zakat is 2.5 percent (one-forty percent) of your total Zakatable assets.

For example, if your Zakatable assets are $20,000, the Zakat payable would be $500 (20,000 × 2.5% = 500).

How to Calculate Zakat If You Have Gold

If you own solid gold, coins, or jewelry, you should calculate Zakat on it based on its current market value, not its value at the time of purchase.

To understand the value of gold jewelry, it is important to know its weight (in troy ounces) and purity (in carats). One troy ounce is equal to 31.1035 grams.

At $5,100 per troy ounce, 1 gram of pure gold is worth about $164.

You can use an online calculator like Islamic Relief or Muslim Aid to calculate Zakat. It is always best to contact your nearest reliable religious institution to know the correct nisab and local market price.

Unstable market

The main issue in paying zakat is the determination of the price of gold. Currently, the market for this precious metal is not stable. The price fluctuates almost every day, and sometimes the price increases or decreases twice a day.

In Bangladesh, the price of gold has changed a total of seven times so far in the current month of 2026 (up to February 26). Out of these, the price increased four times and decreased three times. The last increase was Tk 3,266 on February 21.

Al Jazeera reports.