Gold demand goes down this Teej festival

Kathmandu, Sept. 7: The demand for gold surprisingly experienced a massive decline during this Teej festival thanks to the excessive price hikes. In the past, gold demand used to be high during the women’s festival. 

But this year, when the price of gold set one new record after another, the business of the yellow metal sank in Teej, and the Teej revellers did not wear ornaments as in the past.

Gold traders have said that the daily trade of gold is hardly 5 kg this year while it was 10 kg last year and above 40 kg before the COVID-19 pandemic. 

Gold prices soared unprecedently reaching Rs. 153,000 per tola (11.66 grams) over the past few weeks. The global fluctuations in gold prices led to the price rise. 

The transaction of gold was recorded less during Teej this year than in the past, said Tej Ratna Shakya, a gold trader. Jewellery shops in Kathmandu and other major cities have reported a substantial reduction of customers at their shops.

“In about 55 years in the gold business, I have never witnessed this level of low gold trade during the Teej festival. Many families are postponing their plan to buy gold or opting for less expensive alternatives this year,” he said.

The demand for gold has dropped by 50 per cent this year as compared to last year and by 90 per cent as compared to the sale of gold before the period of the COVID1-19 pandemic, he said.

The daily transaction of gold was recorded at about 10 kg during the Teej Festival last year, he said, adding that the demand dropped to below 5 kg daily this year. The demand for gold used to surge one month before Teej and reach up to 45 kg a day a week before the Teej festival. But this time, gold traders are shocked by the sharp fall in the gold demand, he said.

Except for the time of the COVID-19 pandemic, demand for gold had not decreased at this level, he said.

In the meantime, the price of gold has increased by over Rs. 40,000 per tola this Teej festival as compared to last year’s festival. The gold price was Rs. 112,000 per tola during Teej last year, and this year it climbed to over Rs. 153,000 per tola. 

Shakya, said, “There has been a sharp fall in gold trade due to the rise in gold prices and economic instability. This has had a major impact on our business during Teej and the traders are greatly worried.”

Due to sluggish economic activities, the income of people has decreased which has resulted in the reduction of their purchasing power, and this has affected the gold business, Shakya said.

“Instead of purchasing the gold, many visit shops to sell their gold,” he said. The demand for gold started declining in the country after the gold price crossed Rs. 100,000 per tola, he said.

 “The current gold prices are beyond our capacity, we do not have that money to buy ornaments even in Teej,” said Rita Dhungana, a resident of Bhaktapur. 

As the prices of everything from salt to gold have increased, it has been difficult for people to manage expenditure from their limited income, she said.

After being unable to buy gold, many people are found buying gold-plated ornaments in recent years. 

Shakya said that a decade ago, people were not interested in gold-plated ornaments, but for the last few years, more people have started buying gold-plated ornaments for Teej because of skyrocketed gold prices. “As a result, the shops selling gold-plated ornaments are more crowded than the gold shops,” he said. 

Gold price sets another record 

Meanwhile, the price of gold set another new record on the day of the Teej festival on Friday. 

According to the Federation of Nepal Gold and Silver Dealers’ Association (FENEGOSIDA), the gold price increased by Rs. 1,300 per tola on Friday and reached Rs. 153,300 per tola. 

Earlier on August 29, 2024, the price of gold had reached Rs. 153,200 per tola.

A slight increment in the gold price in the international market and 

devaluation of Nepali rupees against US dollar contributed to the increase in its price in the local market, setting a new record, said Shakya.

The price of gold has increased by USD 25 per ounce to 2,519 in the international market today.

The exchange rate of the US dollar against the Nepali currency has been steadily rising, and on Friday the exchange rate reached the highest at Rs. 134.68 for one dollar.