Gold price declines by Rs 1,200 per tola

KATHMANDU, MAY 17:

Gold observed the second largest drop in prices within a month today, as the price of the yellow metal retreated by Rs 1200 a tola (11.664 grams).

The price of gold was fixed at Rs 50,000 a tola, which stood at Rs 51,200 yesterday. In the international bullion market, gold fell to $1400 per troy ounce following the low United States inflation data.

Investors chose to liquidate gold as the US wholesale prices fell by 0.7 per cent in April. The higher rate of price slump removed the need of holding gold that is considered a hedge against inflation.

Back in April 16, gold price had dropped by Rs 3300 to Rs 49,500 per tola in the domestic market following panic selling by gold hoarders in the international bullion market.

The possible sell-off of gold by Cyprus and further monetisation of gold reserves across Europe, Goldman Sachs taking short position on gold, and the possibility of US Federal Reserve ending Quantitative Easing sooner, had impelled investors to sell gold back then that pulled down the price.

Likewise, fourth quarter recovery in the jewellery sector continued into the first quarter of 2013, according to the World Gold Council's Gold Demand Trends that has claimed that investment demand has however, declined.

The report attributed decline in investment demand — relative to first quarter of 2012 — to the net outflows from ETFs, which obscured the strong rise in investment for gold bars and coins at the retail level.

"Likewise, central banks have added 109.2 tonnes of gold to their reserves in first quarter of 2013, the ninth consecutive quarter of net purchases," it said, adding that global gold supply has also witnessed a little change in the first quarter of 2013 compared to the first quarter of 2012, and stood at 1,051.6 tonnes.

Source: THT