The yellow metal was priced Rs 55,100 on June 9, but had rapidly rallied, touching Rs 57,700 per tola on June 19 amid news of euro zone crisis and global economic gloom. [break]Though the price recorded significant upheavals till the first week of July, it has gone down over the last couple of days.
"Gold shed Rs 600 per tola on Wednesday itself," said Tej Ratna Shakya, president of Nepal Gold and Silver Dealers Association (Negosida), referring to the fresh downward trend. He attributed the drop to gain of Nepali rupee vis-a-vis US dollar and decline in the price of the yellow metal in the international market.
Despite the drop in prices, dealers, however, said the downturn in sales continue to prevail. Dealers also attributed the end of marriage season and absence of major festive days as other factors behind low demand of gold in the market.
“This is a lean season in terms of sales. So it is pretty obvious for demand to remain low. But even during the wedding season in June, gold consumption had remained at just around 25 kg a day, whereas in the same season previous years, sales used to stand at around 40 kg a day," said Shakya.
Dealers said around 40 percent of consumers are recycling the gold to mold it into latest designs to fulfill their personal requirements. Owing to the low demand, dealers said they have taken lesser quantity of gold from the banks over the past few weeks.
The government had raised the cap of gold sales to dealers (by commercial banks) to 20 kg a day from 15 kg on February 22, as demand had remained high then. But as sharp fluctuation in Nepali rupee turned both dealers and bankers jittery, dealers said they are operating with low stock and bankers also have shown reluctance to import gold.
Nepal fulfills its gold demand through imports and any fluctuation in the value of dollar and the international bullion price impact price of the yellow metal in the local market.
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