KATHMANDU, April 8: As the price of gold continues to rise, sales have shown a noticeable decline. The persistent increase in gold prices over the last five fiscal years, coupled with global market instability, has led to a weakening sales trend in Nepal. Despite the rise in gold prices, investors have not been as attracted to the market as expected, say local business owners.
According to data from the Federation of Nepal Gold and Silver Dealers’ Association, the Department of Customs statistics, and market trends, although there has been fluctuation in gold imports, the increasing prices have dampened demand. From fiscal year 2019/20 to 2023/24, Nepal has imported an average of 2,900 to 5,000 kilograms of gold annually. During this period, the average price per tola ranged from Rs 65,000 to Rs 104,000, which is the price of imported gold before taxes, insurance, and service charges are added upon arrival in Nepal.
The COVID-19 pandemic significantly impacted sales in fiscal year 2020/21. The government-mandated lockdown led to the closure of gold and silver shops, halting nearly all trade activity. During this period, gold imports fell to just 3,925 kilograms, showing a modest increase from the previous year, though business activity remained sluggish. Former President of the Nepal Gold and Silver Dealers Association, Manikratna Shakya, points out that the continuous rise in prices, combined with a decline in purchasing power, has drastically affected gold sales.
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In fiscal year 2021/22, gold prices hit new records, with average imports rising to 5,053 kilograms. However, despite the high demand during traditional festivals like Teej and Tihar, sales plummeted as the price per tola reached nearly Rs 82,000. Similarly, in fiscal year 2022/23, the trend continued, with 2,917 kilograms of gold imported, totaling nearly Rs 22.35 billion in value. During this year, daily sales dipped below 20 kilograms on average.
In fiscal year 2023/24, following a reduction in customs duties on gold imports, there was a slight positive shift. Nearly 2,900 kilograms of gold, worth Rs 25.95 billion, were imported, and prices briefly hit Rs 152,000 per tola. While the market showed some signs of recovery, overall demand still remained lower than it was five years ago, largely due to young investors increasingly turning to alternative investments such as cryptocurrency and stocks, according to business owners.
As of the current fiscal year, up to mid-March, gold imports have reached approximately 1,188 kilograms, worth Rs 14.37 billion. The average price per tola has hovered around Rs 140,000. Recently, gold prices have experienced significant volatility. Globally, the price of gold rose sharply after 30 December, 2024, peaking at $3,126 per ounce by April 1. This surge has led to an increase in the price of gold in Nepal as well, with local prices reaching Rs 180,300 per tola on April 3. However, after reaching these highs, the market has seen a decline, with prices dropping to Rs 174,300 per tola by April 6.
This sudden drop in gold prices is believed to be linked to tariffs imposed by the United States on various countries, contributing to geopolitical tensions. Experts predict that despite the current downward trend, gold prices may regain momentum in the coming months.
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