Gold price down by Rs. 15,900 per tola as govt cuts customs duty

Kathmandu, Nov. 26: After the government reduced the customs duty for the precious metal, the price of gold has plummeted in the domestic market on Monday.

In a significant single-day decline, the price of gold fell by Rs. 15,900 per tola following the Cabinet's decision to slash the customs duty on gold.

According to the Federation of Nepal Gold and Silver Dealers' Association, gold is trading at Rs. 151,300 per tola on Monday after adjusting to the declined customs rate.

The gold was traded at Rs. 167,200 per tola in the domestic market on Sunday. 

Previously, a 20 per cent custom duty was applied, a raise from the former rate of 15 per cent implemented through the budget introduced on May 28 for the fiscal year 2024/25.

However, after a recent Cabinet meeting, the custom duty was reduced to 10 per cent, which has led to a sharp decline in gold prices in the domestic bullion market.

Similarly, the price of silver has also declined by Rs. 115 per tola on Monday. 

Silver was traded at Rs. 1,845 per tola on Monday from Rs. 1,960 per tola on Sunday.

The government has similarly reduced the custom duty for silver from 15 per cent to 10 per cent.

“The price has been adjusted accordingly from Monday after the government set a 10 per cent customs duty,” said Diyesh Ratna Shakya, Senior Vice President of FENEGOSIDA. 

The price of gold has declined by significant amount due to adjusting prices based on a reduction in customs rate and a decline in its price in the international market, he said.

"Based on the international price and the dollar exchange rate, the price of gold in the local market has decreased by about Rs. 13,500 per tola as the customs duty has been reduced from 20 per cent to 10 per cent. Similarly, on Monday, the gold price dropped by US$ 46 per ounce in the international market, causing the price of gold to fall by about Rs. 16,000 per tola in the local market today."

Gold, which was at USD 2,716 per ounce in the international market on Sunday, fell to USD 2,670 per ounce on Monday. Earlier, gold entrepreneurs had repeatedly requested the government and concerned bodies to reduce the customs rate to control gold smuggling to Nepal from India as the customs rates of gold were lower in India than in Nepal.

Through its budget, India reduced the customs duty on gold and silver from 15 per cent to 6 per cent. This made gold expensive in Nepal and cheap in India. This is suspected to have led to smuggled gold entering the market. There has been a sharp decline in the amount of gold coming through the formal system.

According to Shakya, with the reduction of customs duty on gold, gold business is expected to increase in the local market. 

Due to the price hike of gold in the local market, the daily demand for gold was below 10 kg and businessmen were in trouble running their business, he said.

With the increment of gold price in the international market, the price of gold had set one new record after another for the past few months. 

Earlier on October 31, 2024, the price of gold had set a historic record of Rs. 171,000 per tola in the domestic market.