KATHMANDU, Dec 26: Gold price has continued to drop in the domestic market as the yellow metal is losing its luster in the international market amid looming fiscal crisis in the United States.
On Wednesday, gold became cheaper by Rs 200 per tola (11.664 grams) and was traded at Rs 58,300 per tola. Gold has already shed Rs 800 per tola over the period of a week in the local market.
Tej Ratna Shakya, president of Nepal Gold and Silver Dealers Association (Negosida), told Republica gold has become cheaper in the domestic market as the increasing value of euro vis-à-vis major currencies has attracted investors toward it.
“As investors are shying away from the bullion market to invest in euro, the demand for gold has dropped. It subsequently affected prices,” said Shakya.
Gold price dropped to US$ 1,655 per troy ounce (31.10 grams) in the international market on Wednesday from $1,659 recorded on Tuesday´s closing.
Traders were hopeful that the decline in price would raise demand for the yellow metal in the market. But the demand, which dropped after the wedding season concluded in mid-December, has not yet increased.
“As the price has been continuously declining, people who are planning to get married in January and February are holding their money in anticipation of further price drop,” said Shakya.
According to Negosida, daily demand for gold had jumped to 40 kg during the recently concluded wedding season. The demand has now dropped to 20-25 kg a day.
“We expect the demand to increase further as the next wedding season is approaching nearer. But continuous drop in price has affected demand as people are waiting for the price to go down further,” said Uttam Shakya, proprietor of Surya Bahadur Son´s Jewelry Shop at Wotu.
As the wedding season approaches, the demand of gold increases but due to the limited supply it makes the trader´s difficult to fulfill the demand as per the demand of customers.
“The wedding season is the time when our business booms, but the limited supply (of 15 kg a day) hampers our business a lot,” Uttam said, adding that it has also encouraged illegally supply of gold from China and India.
The price of silver has also dropped by Rs 35 per tola in the domestic market. Silver was traded at Rs 1,095 per tola on Wednesday.