Gold close to Rs 40,000 per tola

Domestic gold market recorded a whopping jump of over Rs 1,300 per ten grams to hit new high of Rs 39,600 per tola (11.664 grams) on Tuesday as the market opened after four-day Tihar festival. Gold was priced at about Rs 38,300 per tola when the market closed for the festival on Thursday last week. The gold dealers attributed the rise to increase in international prices of the yellow metal.  

International gold price had risen to record US$ 1,414.60 per troy ounce (31.103 grams) on Tueday on the back of sliding dollar. As such economic woes instantly impel investors to switch to gold -- the safer haven -- it spurred demand causing the global prices to shoot up. However, local dealers fear that such huge rise in prices could cause sales to recoil, especially as the new wedding season is starting from November 21 and they were expecting to make a good business over the next one month.

"After long-running shortage, we had just started to witness growth in business. But the price inching close to new psychological level of Rs 40,000 per tola has dampened that prospect," said Tej Ratna 0Shakya, president of Nepal Gold and Silver Dealers Association. Dealers even anticipated the prices to jump further over the next few days adding woes to Nepali gold market that had been in tatters over the last couple of months, mainly after the government banned its import on failing to maintain higher tariff due to the lack of political understanding on the issue.

While the step was aimed at curtailing the country´s soaring trade deficit, it had caused short-supply, triggering inward smuggling of gold from India. "We had failed to meet the demand in the weeks before and after Dashain due to inadequate supply. Now when situation started to improve with Nepal Rastra Bank (NRB) auctioning out 100 kgs of gold every week, a new wave of price rise threatens to rattle customers," said Shakya.

Gold and jewelry dealers have been anticipating sales to rise by 50 percent during the upcoming wedding season. This would have soared sales volume to some 30 kgs a day. But with the price rise, they anticipate the people to recycle their old ornaments to meet their family and social obligations. "We expect the demand to plummet now," said Shakya. Dealers stated that they anticipate the recycled use to jump to 50 percent, limiting fresh sales to around 15 kgs a day. That is not all. Silver too hit new high of Rs 664.50 per ten grams (Rs 775 per tola) in the local market. The rise again is attributed to international market as silver was traded at US$ 28.16 per troy ounce, which was a 30-year high, Tuesday.

Source:
myrepublica