Gold prices soar again, worry local traders

Kathmandu,Feb.1: Gold prices in Nepal have started surging once again. The price of the precious yellow metal climbed to Rs. 162,800 per tola on Friday. 

The recent surge in prices comes just months after a significant drop in November 2024, when the government reduced customs duties on gold imports by 50 per cent.

With the reduction of customs duty, the price of gold dropped by Rs. 15,900 per tola to Rs. 151,300 per tola from Rs. 167,200 per tola on November 25, 2024. The price of gold further dropped to Rs. 148,700 per tola on November 26, 2024. The price of gold has increased by Rs. 14,100 per tola in two months.

Earlier on October 31, 2024, the price of gold reached the highest at  Rs. 171,000 per tola in the domestic market.

The reduction of the customs duty had temporarily lowered the price of gold, providing some relief to the consumers. However, with global economic factors and market dynamics influencing the price of gold, the costs have again skyrocketed, leading to a fresh wave of anxiety among local buyers.

According to the Federation of Gold and Silver Dealers’ Association, with the fluctuation, the price of gold increased by Rs. 2,300 per tola and was traded at Rs. 162,800 per tola in the local market on Friday. The gold was traded at Rs. 160,500 per tola in the local bullion market on Thursday.

Gold traders have expressed concern about the unpredictability of the market, with consumers feeling the impact of the fluctuating prices. 

A significant increment in the gold price in the international market has contributed to the increase in its price in the local market, said Tej Ratna Shakya, a gold trader.

 “The increase in the gold price in the international market is the main reason for its high price in the local market,” he said. The price of gold increased by USD 36 per ounce to 2,798 in the international market on Friday, he said, adding that the present fluctuation of gold price in the international market showed that its price would further increase in the local market. 

The international market is very sensitive, he said, adding that foreign investors and general people in international markets are making investments in gold, which resulted in an increase in its demand as well as price.

"The economic sector has been shaken since Donald Trump took office as the President of the United States and the decisions he has taken. Because of this, investors and the general public in the international market are willing to invest in gold instead of other sectors, contributing to its price increase," he said.

The price of gold, often seen as a safe commodity in times of economic uncertainty, has seen fluctuations recently, and Nepal has not been an exception, said Shakya. 

He said that the price of gold has been increasing in the international market even the US dollar becoming stronger. Generally, the price of gold used to be dropped in the international market when the value of the US dollar goes up. But this time, it is not the case. 

Stating that around 20 kg of gold is being imported daily by the commercial banks as per the decision of Nepal Rastra Bank, he said that the demand for gold could not be increased even in the wedding season due to price hikes.

“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.

He said that the skyrocketing price of gold would affect business along with consumers and employees engaged in this sector.