Gold hits record high price of Rs 111,800 per tola on Thursday, backed by the uncertainty in the global economy

Published On: May 5, 2023 08:00 AM NPT By: Republica | @RepublicaNepal

KATHMANDU, May 5: Gold hit a record high price with the Federation of Nepal Gold and Silver Dealers Associations (FENEGOSIDA) fixing the price of the precious yellow metal at Rs 111,800 per tola (11.663 grams) on Thursday.

In the past week, the price of gold surged Rs 2,200 a tola from Rs 109,600 per tola. On Thursday alone, the price escalated by Rs 1,200 per tola.

The federation sets the daily gold price in line with international market prices which are the primary determinants of gold and silver prices in the domestic market. According to the FENEGOSIDA, an increasing uncertainty in the world economy triggered by the successive hike in interest rates by the US Federal Reserve has caused the price of gold to increase in recent days.

Tej Ratna Shakya, former president of the FENEGOSIDA, said the price of gold has been escalating mainly due to the uncertainty seen in the global economy. According to him, investors consider gold as a safe haven asset in the international market, so its demand increases in case investors predict any uncertainty.

Since March 2022, the US Federal Reserve raised the interest rates successively for nine times, citing to check the price hike in the US economy. Recently, the US monetary authority increased the interest rate by 0.25 percent to 5.25 percent.

“After accelerating to a near-record high as the US Federal Reserve signaled its rate hike to $2,072.19 per ounce on with elevated economic risks seen fuelling robust demand for safe-haven bullion,” reads a news report of Reuters.

Price of gold started to escalate mainly in the past year after the Russia-Ukraine war broke out in February 2022. The precious metal became expensive by over Rs 14,600 per tola in the last one year. On May 4, 2023, the price of gold stood at Rs 97,200 per tola, while it fell to as low as Rs 93,100 per tola in October.

The escalating price has taken a toll on the domestic demand for gold despite the ongoing wedding season. According to the gold traders, the demand has plunged heavily after the bullion price is setting record high prices every now and then.

The records with the Department of Customs show that gold imports declined 22.51 percent to Rs 40.39 billion until mid-March, the first eight months of the current fiscal year. Nepal imports most of its gold from Dubai, Turkey and Switzerland.