Gold price tumbles to 16-month low

KATHMANDU, Nov 2:

The price of gold has plunged to a 16-month low of Rs 50,000 per tola (11.664 gram) in the market on Sunday. Price of the yellow metal plummeted by Rs 500 per tola on Sunday, compared to its price recorded on Friday.

As the reflection of drop in price of the yellow metal in the international market, gold price has been plummeting in the domestic market since a couple of weeks.

Gold was traded at US$ 1,174 per troy ounce in the international market on Sunday as against US$ 1,194.81 on Friday.

Compared to its price two weeks before, gold price has come down by Rs 2,800 per tola. On October 21, gold was traded at Rs 52,800 per tola in the domestic market.

Traders have cited multiple reasons, ranging from the appreciation of US dollar against other major currencies, tumbling oil price in international market and investors´ shift towards share markets, to recent decline in gold price.

“US dollar, these days, has become stronger against other currencies and investors are moving toward share market then investing in gold,” Mani Ratna Shakya, president of Federation of Nepal Gold and Silver Dealers Association told Republica, adding “This has resulted in low demand for gold pushing down its price in the market.”

According to Nepal Rastra Bank, US dollar is valued at 98.48 against rupee in the market.

Similarly, traders have also pointed out the recent decline in price of oil in international market to the tumbling gold price. “Oil price is on declining trend these days reducing the production cost of gold,” Ramesh Maharjan, immediate past president of Nepal Gem and Jewelry Association (NGJA) said. According to him, declining oil price is the key to plummeting gold price.

Traders said that gold price might further decline in near future. “As of now, investors have been selling gold and investing in stocks,” added Shakya.

However, traders are optimistic that jewelry business would gain pace in the upcoming wedding season.

According to traders, the daily demand for gold had come down to almost 25 kg a day along with the end of festive season.

Similarly, silver price has come down to a four-year low of Rs 690 per tola on Sunday. Traders said bullion business has not increased significantly, despite the drop in price of gold and silver. “Buyers are still waiting gold price to drop further,” Maharjan said.

Source: Republica