Gold price creating history, frequently
KATHMANDU, JUN 17 -
With the price skyrocketing, gold is gradually getting out of middle-class reach. Such is the rise that the price set records for three straight days last week.
Instead of buying fresh designs, Bullion traders say the trend of remaking old jewelries is on the rise. Even regular, potential customers have stopped buying, they say. “Half of our customers are remaking their old ornaments,” said Tej Ratna Shakya, president of the Nepal Gold and Silver Dealers’ Association (Negosida).
The escalating price has forced customers, particularly those buying gold for wedding purpose, to reduce quantity. For many Nepalis gold ornaments are a must in wedding ceremonies. “The price has increased sharply over the last year,” said Shakya. “This has resulted in low sales.”
The gold price started to rise since 2008, according to gold traders. Since then, the price has gone up by a whopping 133 percent. In 2012 alone, the price rose by Rs 4,240 per 10 gram.
Last week’s figures show how the gold price is escalating in the local market. When the market opened on Sunday, gold was traded at Rs 48, 270 per 10 gm, but the figure jumped to Rs 48, 825 on Wednesday and to Rs 49,040 on Thursday, before closing at a record high of Rs 49,080 per 10 gram on Friday.
The price of gold in the domestic market is determined in line with the international trend. With the price remaining volatile in international market, its impact is reflected here. Major drivers of the price in the international market are global macroeconomic events.
Gold price is expected to further rise in dollar terms due to the sovereign debt crisis in Europe and a possible quantitative easing. International media have reported that the worsening eurozone crisis is catalysing gold demand and is, thereby, supportive of gold prices.
Bullion traders attributed the surge in the price in the local market to the rise in the international market price and a freefall of Nepali rupee against the US dollar. Since the local market is dependent on the international market for gold and silver, changes in the exchange rate of dollar and gold price are directly proportional. Traders predict a further rise in gold price if the Nepali rupee further devaluates.
The government has maintained a quantitative restriction on gold imports since 2010 after massive imports led to a negative balance of payments situation. The import quota is presently 20 kg a day, up from 15 kg previously. Nepal imported gold worth Rs 41.63 billion in fiscal 2009-10. Imports plunged to Rs 11.35 billion last year after the imposition of the quota.
Imports have reached 4,350 kg worth more than Rs 18.8 billion in the first nine months of this fiscal year. Nepal imported 400 kg of gold in mid-January which jumped to 600 kg in mid-April.
Source: The Kathmandu Post
