Why has Gold Gained Massive Rs. 3900 per Tola in Two Days in Nepal?

Gold prices have made headlines once again in the Nepali market as the value of gold hit an all-time high in the country, today. Today's gain results from an Rs. 1500 single-day gain from yesterday's price and Rs. 3900 in the past two days.

According to the official website of the Federation of Nepal Gold and Silver Dealers' Association (FENEGOSIDA), fine gold is being traded today at Rs. 112,000 per tola. Yesterday, the rate was maintained at Rs. 110,500 per tola. Meanwhile, Tejabi gold is being traded at Rs. 111,450 today. In contrast, the rate was maintained yesterday at Rs. 109,950 per tola.

The price of gold has risen by Rs. 3900 per tola in two days.

Earlier, on Monday in a parliamentary session of both the houses in the federal parliament Finance Minister Dr. Prakash Sharan Mahat announced the fiscal budget of 2080-81.

Addressing the parliament, Minister Mahat stated that new structure of taxation has been imposed on the custom rate of gold. Following the adjustment, 15 per cent tax on custom of gold has been imposed. 

Previously, on import of 10 grams of gold Rs. 8,500 custom tax was levied. However, the current revision has rather set custom on import at 15% as opposed to the fixed amount in rupees earlier. This implies that a 15 per cent tax on purchased price has to be submitted to the government while importing the yellow bullion. Today, almost Rs. 13,000 has been added as customs on gold rate, that amounts to more than 50 % increase on custom tax during import of the precious metal. 

Similarly, in the case of silver earlier Rs. 107 was fixed to be payed on import of 10 grams of the metal. However, the new arrangement obliges the tax payers to pay 15 per cent of amount as custom tax on purchased price.

Gold and silver prices are fluctuating considerably as the budget for 2080/081 did not mention a clear response addressing the customs rate related to gold and silver.

Recently, the price of gold made an all-time high in the Nepalese market on 4th May 2023. Fine gold traded at Rs. 111,800 per tola while tejabi gold was traded at Rs. 111,250 per tola that day.

On the sideline, silver has gained Rs. 20 per tola. The lustrous white metal is being traded in the local market today at Rs. 1,395 per tola, compared to yesterday's closing rate of Rs. 1,375 per tola.

On Tuesday, price of gold had spiked by Rs. 2400 per tola, which according to FENEGOSIDA, had been increased after factoring in assumed increase in custom tax of gold as announced in the Budget 2080-81.

On Wednesday, however, enacting the new tax arrangements on gold, the price of gold spiked to an all-time high, according to FENEGOSIDA.

When gold was traded at $2,050 per ounce in the international market, the price in Nepal was Rs 111,000 per tola. Currently, the price per ounce in the international market has decreased to $ 1,963 , and the highest price per tola in the Nepali market has reached 112 thousand rupees.