KATHMANDU, June 16: The number of people visiting jewelry shops to sell their gold ornaments has increased as the price of the precious yellow metal continues to soar.
With the enforcement of the lockdown since March 24, the businesses have remained shut with no transaction whatsoever, leaving gold dealers worried about not being able to manage their businesses. “The flow of sellers is larger than that of buyers because of the lucrative gold price,” said Dharma Sundar Bajracharya, general secretary at the Federation of Nepal Gold and Silver Dealers’ Association (FENEGOSIDA). “It is hard for the dealers to manage the business so the government should intervene with appropriate packages to save the industry.” Gold dealers have asked Nepal Rastra Bank and Nepal Bankers Association to flow loans for industry’s financial management.
Many employers in Nepal have laid off their employees and numerous migrant workers are headed back to Nepal because of COVID-19. “The dealers have limited capital and if the selling trend keeps going on it will be hard to sustain,” Bajracharya told Republica, adding that the government should form a body to buy the locally-purchased gold. The Nepal government does not validate locally purchased gold as the source of gold purchase.
“As the return rate is shooting up in the chart, the government instead of buying gold from international buyers should validate the locally purchased gold and re-circulate it in the market,” he further added. Gold dealers source 20 percent gold from the local purchase annually.
Dealers say that the demand for gold has slowed down in the domestic market. An average of 20 kilograms of gold was traded daily before the lockdown whereas the figure is almost zero now. However, gold dealers are hopeful of 10 kg daily gold trade during the wedding season. Gold dealers have requested people to sell their ornaments only if there is a dire need. “The businesses have remained shut for a long time and it is not just now but the gold dealers have been suffering from a financial hit for the last one year,” he said asking cooperation from consumers.
The price of the precious metal has been rising steadily in Nepal since last year with occasional drops. The price of gold had increased by Rs 10,400 per tola after the market opened after nearly two and a half months. The precious yellow metal was traded for Rs 87,400 per tola (11.664 grams) on June 7 against Rs 77,000 per tola on March 23.
Similarly, the price of gold stood at Rs 89,500 per tola on Tuesday and the price of a tola of silver has reached Rs 925. As local administration has relaxed the lockdown and has allowed shops including jewelry shops to reopen at some places, the bullion market came up with a surprising rate. Bajracharya warns of illegal dealing of gold if the government continues to ignore the issue.
The sector has an estimated investment of Rs 60 billion in Nepal. Gold dealers have mentioned the need for an economic package including concessional loans, interest and exemption on charges to recover from the financial hit.
The uncertainty in the world has attracted investors to the gold market contributing to the price hike. “The government has customs duty for the import of gold which is also a reason for the increase in its price,” Bajracharya said, “Gold price can go down only if the share market stabilizes and investors return to the share market, otherwise it will continue to go up.”