Duty revision, global clues pull gold price down

KATHMANDU, July 20:

Gold price is falling in the domestic market after the government reduced tax on imports of the yellow metal.

Price of gold, which was already falling due to price drop in the international market, dipped sharply after the government revised down import duty on gold. Through the budget for Fiscal Year 2015/16, the government reduced tax on gold imports by Rs 100,000 per kg to Rs 420,000.

Price of gold has dropped by Rs 1,200 per tola (11.664 grams) over the past week to drop to eight-month low of Rs 49,500 per tola.

"Gold price is falling in the international market following news reports that US Federal Reserve is hiking interest rate this year. Drop in import duty by the government has also

affected gold price in Nepal," Mani Ratna Shakya, president of Federation of Nepal Gold and Silver Dealers Association told Republica. Shakya added, "As the import duty has been reduced by Rs 100,000 per kg, price of gold has come down in the domestic market."

Gold was traded at $1,135 per troy ounce in the international market on Sunday.

Shakya said the federation had urged the government to reduce import duty on gold, arguing that only reduction in duty would help control smuggling of gold into the country. The government has also increased tax on finished gold jewelries by 5 percentage points to 15 percent as per the request of the federation.

"We are hopeful that downward revision in import duty will help to stabilize gold price and discourage import of gold through illegal channels," Shakya added.

Meanwhile, jewelers say they are hopeful that drop in price would help to revive sale of golden jewelries which has been affected after the earthquake. "Our business is slowly improving and demand for gold has climbed to around 10 per kg per day," Tej Ratna Shakya, immediate past president of the federation, said. "It is good to note that our business is improving ahead of the festive season."

Source: Republica