KATHMANDU, Aug 6: People rushed to the gold dealers and jewelry shops on Monday to sell gold as price of the precious metal marched to record new high of Rs 67,800 per tola (11.664 grams) in the domestic market on Monday. The price increased by Rs 1,500 per tola in a day.
"The people are aware of the price hike, and they want to benefit from the situation as much as possible," said Ramesh Maharjan, president of the Federation of Nepal Gold Silver Gem and Jewelry Associations. "Jewelry shops also wanted to use their gold stocks rather than buy it from the dealers."
Gold traders say that the return flow of gold has seen a consistent surge after the price hit Rs 65,500 per tola this year.
The domestic market currently has only one-fourth of the usual demand. With the decline in demand, the import of gold has been halted. Nepal Bankers' Association (NBA) had halted gold import a month ago, citing poor market sales. Nepali commercial banks import gold into the country turn-wise.
A total of 670 kilograms of gold is in stock at the moment, according to Anil Sharma, executive director of NBA. "We stopped importing as the stock kept piling up." He said import would resume if gold sales ease in the market.
Only 26 kilograms of gold were sold in the market in the Nepali month of Asar, while 600 kilograms of gold were sold in the previous month, Jestha.
According to the Federation of Nepal Gold and Silver Dealers' Association, the precious yellow metal was traded for Rs 66,300 per tola on Sunday. It was traded for Rs 65,800 the previous day.
"The US-China trade war took a new turn following President Trump's statement to impose 10 percent tariffs on another $300 billion of Chinese goods starting September 1. That attributed to the price hike," said Tej Ratna Shakya, past president of the Federation.
Investors consider investment in gold to be safe. They are attracted to gold market, which is considered to be an attractive area of investment when the US dollar and interest rates are on a downward trend that makes the yellow metal dearer.
According to Maharjan, every time there is tension among countries having an ability to impact the global economy, gold price fluctuates. He said the Nepali currency was weakening compared to the US currency, which has impacted Nepal's gold trade.
"The tension between Iran, North Korea, and China have also attributed to the uptrend of the gold price," Maharjan said, adding: “The Federal Reserve's recent decision to lower the interest rate by 25 basis points for the first time in a decade has resulted in market turbulence."
Designated commercial banks can sell a maximum of 20 kilograms of gold to dealers in a day. According to Nepal Rastra Bank, the central bank of Nepal, 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 and Rs 24.30 billion, respectively, in the fiscal years 2017/18 and 2016/17.