Gold traded at Rs 59,900 per tola on Tuesday in the local market. On Nov 4 last year, the precious metal reached Rs 61,850 per tola setting a new record on the strength of international gains and devaluation of the Nepali rupee.
The latest price rise has been attributed to the continuing plunge of the Nepali rupee to Rs 105.31 against the US dollar. Further, the increment in gold prices in the global market by over US$ 25 per ounce has pushed up local prices. Daily sales have dropped with the yellow metal becoming pricier, said traders.
Manik Ratna Shakya, former general secretary of the Federation of Nepal Gold and Silver Dealers Association (Fenegosida), said that the Nepali rupee had been going downhill even as global gold prices increased by leaps and bounds. “Wednesday’s rise was unexpected, and it has hit local customers just ahead of the festive season when consumption goes up,” he added.
Alongside the yellow metal, silver also rose to Rs 1,115 per tola on Wednesday. On Sunday, it traded at Rs 1,010 per tola in the local market. Fenegosida sets the daily local prices of bullion based on international prices, exchange rates, customs duty and mark-up for dealers.
Market trends show that gold prices increased during the last one month due to a weakened Nepali rupees, hike in customs duty by Rs 600 and price hikes in the international market. The exchange rate has increased by Rs 10.85 in the last one month as per Nepal Rastra Bank. On July 28, the bank had fixed the exchange rate at Rs 94.46 per dollar.
There is fear among dealers and customers that gold could rise further with a stronger greenback. Moreover, a reduced supply, planned customs duty hike by the government and black marketing may push up prices with the festive season approaching.
“Daily sales have come down by over 50 percent due to the gold price hike today,” said Ramesh Maharjan, president of the Federation of Nepal Gold, Silver, Gem and Jewellery Association. Some dealers also said that if the slump in demand continued, there would be no need to increase the import quota and customs duty.
Based on the demand by dealers to hike the supply, the government is working to increase the import quota to 20 kg daily and fix the customs duty in line with India. In the international market, the yellow metal traded at US$ 1,398 per ounce on Tuesday. The daily price increased to US$ 1,428 per ounce in the global market on Wednesday.
The Nepali rupee fell to a record low of Rs 105.31 per US$ 1 on Wednesday from Tuesday’s exchange rate of Rs 103.01. The yellow metal extended gains to a fifth straight session in the international market on Wednesday to reach a three-month high.
Gold prices in the international market gained on safe-haven buying due to geopolitical tensions in Syria, according to international media reports. The possibility of US military action against Syria pushed up gold prices in the global market which also contributed to the rise in the domestic market.
Source: The Kathmandu Post
