KATHMANDU, July 20: With no trade in sight as a result of the COVID-19 impact, the domestic gold market has faced a loss of Rs 22 billion in four months.
After the lockdown on March 24, the market remained shut and has not shown signs of recovery even after the government relaxed the lockdown, allowing limited businesses to operate. Gold is being traded in very little amount.
Tej Ratna Shakya, past president of the Federation of Nepal Gold and Silver Dealers’ Association (FENEGOSIDA), said that the gold market is on the verge of collapse, and it will be hard to revive the business anytime soon. “The gold market lost Rs 5.5 billion per month due to lockdown,” he added. According to the federation, there used to be a yearly transaction of Rs 60 billion in Nepal.
He said that the price is likely to increase further. “The uncertainty in the world economy has attracted investors to the gold market,” he told Republica Online, adding, “Our currency is very weak in comparison to the US dollar, the price has not decreased and the demand has not increased, resulting in almost zero percent trade in the domestic market.”
People are not buying gold because their income has also dried up. Nepali gold market used to trade about 35 kilograms of gold every day. The demand increased dramatically during festival season, and as much as 50 kilograms of gold used to be traded on a single day. “Only 25 kilograms of gold was traded daily last December, which was the peak season,” informed Shakya, adding that it has now dropped to five kilograms per day. The precious yellow metal was traded at Rs 92,300 per tola (11.66 grams) on Monday.
Gold dealers fear that if the precious yellow metal is not purchased by the people, and if they continue to sell their jewellery, businesses will be affected. “It will take at least six months to a year for the gold market to improve,” he added.
Gold dealers complain that though their businesses have been hit hard, monetary policy has not addressed their problems. “We requested for refinancing but the monetary policy did not address our concerns,” Shakya told, “If people continue to sell their jewelry, we won’t have the money to buy them, and without demand we cannot earn to pay for them.” There are currently 22,000 registered and unregistered gold entrepreneurs in Nepal.