Question Summary:
Valuing gold for Zakat calculation – Average price or Period end price

Question Detail:

The price of Gold changes a few times a minute as such over a year it can and does fluctuate considerably for example the closing price for gold every approx 30 days for the last year is below. DATE                  PRICE £/Gram 25/06/2011                              31.89 25/07/2011                              35.82 24/08/2011                              36.40 23/09/2011                              33.09 23/10/2011                              34.52 22/11/2011                              33.10 22/12/2011                              34.41 21/01/2012                              35.13 20/02/2012                              33.44 21/03/2012                              32.87 20/04/2012                              32.38 22/05/2012                              31.96 AVERAGE                             33.75
The average is higher at £33.75/gram then the last price on 22/05/2012 of £31.96/gram. For the purposes of Zakat would it be better to use the average price or the current price (assuming that I had paid Zakat on 22/05/2012) to work out the value to use for Zakat purposes.

Answer :

In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
According to Hanafī Madhab zakāt on the gold or silver is calculated at its current spot rate on the day of discharging the zakāt. [1]
We understand that your assertion to choose the average price over the year is with the good intention of discharging zakāt at a higher rate to err on the side of caution. In the example which you have provided the average rate is higher than the opening rate, however should the value of gold plummet during the term and then regain strength by the end of the year, the same average would be lower.
And Allah Ta’āla Knows Best
Mufti Faisal bin Abdul Hameed,
Montréal, Canada
Checked and Approved by,
Mufti Ebrahim Desai.