Tej Ratna Shakya, immediate past president of Federation of Nepal Gold and Silver Dealers´ Associations, said price drop in the domestic market is in line with price movement in international bullion market. “Gold has dropped to the level last recorded on August 15, 2011,” added Shakya.
According to Reuters, renewed liquidation in gold-exchange traded funds and its recent drop below the $1,400 per-ounce level spooked bullion investors, prompting them to favor other assets. This contributed in price fall. [break]
“The World Gold Council has stated that gold investment nearly halved in the first quarter as a brighter view of the US economy prompted investors in the west to favor assets such as stocks over bullion,” added Reuters.
Mani Ratna Shakya, president of the federation, said drop in prices in the wedding season, when gold sales soar, has led to drastic rise in demand, creating shortage of yellow metal in the market. “Daily demand for gold had climbed to around 65 kg a day a few days ago. But demand has dropped to around 40 kg a day as the wedding season is coming to and end,” Mani Ratna said. “Also customers have realized that gold is not readily available in the market despite price drop.”
Meanwhile, officials of the federation told Republica that jewelers in different districts have warned them that they would shut shop if gold supply does not improve immediately. “We have been receiving complaints regarding gold shortage from different parts of the country,” Mani Ratna said, adding, “If the price continues to drop and supply situation remained the same, most of the gold shops in the country will be closed.”
´Supply hasn´t increased´
Though Nepal Rastra Bank (NRB) increased gold import and distribution quota to 20 kg per day for two months effective from Wednesday, gold dealers say they have yet to receive the increased quota.
“Commercial banks have told us they will be able to increase gold imports only after a couple of days,” Mani Ratna said. He further added that increment in supply and distribution by mere 5 kg will not help ease supply.
“Customers will have to suffer unless the government fixes supply quota, taking into consideration the market demand,” he added.
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