Can we buy/sell gold in installments in Islam?

It is not allowed to sell gold on a credit or installment basis as it is strictly prohibited in a hadith by Prophet Muhammad ﷺ.

As many companies and gold shops are now selling gold and silver on an installment basis, there was a need to address the issue. 

How does it work?

When a gold shop sells gold in installments, they charge a higher amount as compared to the current gold price.

  • They write an agreement for selling gold at a rate higher than the current market price.
  • The possession of the gold is transferred to the buyer immediately.
  • The seller receives the payments in installments at an agreed-upon schedule.

Can we buy/sell gold in installments in Islam?

Why is it not allowed?

While this practice is allowed for other products, selling gold or silver in installments is not allowed as it involves an interest factor called “riba annasee’ah”, (interest for sale on credit).

Prophet Muhammad ﷺ said: Do not sell gold for gold unless equivalent in weight and do not sell less amount for a greater amount or vice versa.

  • Do not sell silver for silver unless equivalent in weight, and do not sell less amount for a greater amount or vice versa.
  • Do not sell gold or silver that is not present at the moment of exchange for gold or silver that is present.
  • Sahih al-Bukhari 2177

It is not allowed to postpone the payment of gold. On the other hand, it is also not allowed to delay receiving of the gold.

Many other Ismalic scholars have issued a fatwa that gold can neither be sold in installments nor on credit. It will always be traded on the spot.

Source: Saudi Gazette

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