KATHMANDU, Aug 16: The price of gold price increased by Rs 1,200 per tola (11.664 grams) in a single day reaching a new high of Rs 71,500 per tola (11.664 grams) on Thursday.
According to reference rate set by the Federation of Nepal Gold and Silver Dealers' Association, the yellow metal was traded at Rs 71,500 per tola on Thursday. After reaching a new high of Rs 71,000 per tola on Tuesday, the price of gold dropped by 700 per tola to Rs 70,300 on Wednesday. However, the price correction did not last more than a day.A number of factors including the escalation of trade war between the US and China, the recent decision and indication of the Federal Reserve to cut its interest rates and uncertainty over the global economy have contributed to the rally of gold price in the international market, according to bullion experts. As the yellow metal is perceived as a safe haven, investors prefer buying gold whenever there is turbulence, putting pressure on its price.
"Fresh global growth worries now warrant more monetary easing from the US Federal Reserve, while the persistent trade war pressure may also force Beijing to implement more aggressive stimulus steps to bolster growth," Reuters newswire reported on Thursday. "Maybank analysts said in a note that given the complex state of geopolitical risks now, sharp swings in sentiment could be more common going forward."
As the Nepali gold market is totally dependent on imports, fluctuation in gold prices in the global immediately affects the domestic market.
Jewelers say the soaring price of gold has depressed the demands for the precious metal in the domestic market. As demand for gold slumps, commercial banks, who are authorized to import gold in the country, have stopped doing so in recent months. According to the Nepal Bankers' Association, banks have 670 kg in their stock due to lack of demands in the market.
Nepal Rastra Bank allows the commercial banks to import 20 kilograms of gold per day and sell it to dealers. According to the central bank, the commercial banks imported gold worth Rs 31.65 billion in the first eleven months of Fiscal Year 2018/19. The banks had imported gold worth Rs 28.79 billion in fiscal year 2017/18 and Rs 24.30 billion in 2016/17.
Gold dealers say that they are getting overwhelmed with customers who want to sell their gold instead of buying pressure on the eve of festive season like Teej.