Gold, silver prices tumble on Swiss referendum

KATHMANDU, Dec 1:

Silver price came down to a five-year low of Rs 665 per tola (11.664 grams) in the domestic market on Monday, while gold slumped to three-week low of Rs 49,800 per tola.

Silver and gold were traded in the domestic market at Rs 685 and Rs 50,300 per tola, respectively, on Sunday.

The precious metals lost luster in the domestic market as their prices fell in the international market. According to the Federation of Nepal Gold and Silver Dealers Association, gold was traded at US$ 1,151 per troy ounce in the international market on Monday as against $ 1,167.94 per troy ounce on Sunday. Likewise, silver was traded at $14.91 per troy ounce on Monday compared to Sunday´s price of $15.60.

Monday´s sliver price is the lowest since August 2009. Silver had dropped to four-year low of Rs 690 per tola on November 2

Traders have attributed sudden decline in gold and silver prices on Monday to a referendum in Switzerland where people overwhelmingly rejected the central bank´s proposal to boost its gold reserve.

Swiss National Bank´s ´Save our Swiss Gold´ initiative to boost its gold and silver reserves to 20 percent of its total assets from existing eight percent was rejected by 77 percent of the voters.

“Dip in silver and gold prices on Monday is the reflection of decline in bullion prices in the international market due to the Swiss referendum,” Tej Ratna Shakya, immediate past president of the federation, told Republica. "Had the proposal been approved, Swiss National Bank would have to boost its gold reserves by 15 quintals every year."

According to Shakya, that would have raised demand for gold significantly in the international market thereby increasing its price.

Meanwhile, traders say strong US dollar has also contributed to drop in gold and silver prices. "As investors are shifting toward stock markets due to improvement in US economy and strong US dollar, demand for precious metals has fallen globally," Mani Ratna Shakya, president of the federation, said. He also said fall in crude prices was the other reason behind drop in price of gold and silver. "Significant decline in oil price had brought down production cost gold and silver, affecting their prices," President Shakya added.

Traders see gold and silver prices falling further in the domestic market in the coming days due to factors like strong greenback, decreasing oil prices and the impact of the Swiss referendum.

Source: Republica