The joint mechanism was set up to resolve persisting dispute over the three associations of gold traders and dealers on issuing purchase recommendations and price fixation. [break]
The mechanism has representations from Nepal Gold and Silver Dealers´ Association (Negosida), Nepal Gems and Jewelry Association (NGJA), and Nepal Gold and Silver Artists´ Association (NGSAA).
“The meeting failed to reach to any breakthrough as Negosida insisted that quotas should be distributed under proportional system and the other two associations stuck to their stance of upholding the directives of Nepal Rastra Bank,” Tej Ratna Shakya, president of Negosida, told myrepublica.com after the meeting.
As per the NRB´s decision, Negosida can issue purchase recommendations for 50 percent and the new associations can recommend 25 percent each of the total of 10 kg of gold that importer banks can sell in a day.
Shakya said the meeting also decided not to fix gold and silver prices before finalizing guidelines for the mechanism.
Negosida has not issued purchase recommendations after NRB issued new directives. But the other two associations have been recommending banks to sell gold to their member dealers.
“We have agreed to endorse guidelines for the mechanism in our upcoming meeting. We won´t fix gold and silver prices unless the guidelines come into implementation,” Shakya, who is also the coordinator of the mechanism, said.
He further added that the draft guidelines would be prepared by collecting suggestions from all the members of the mechanism by Wednesday.
The guidelines are expected to specify criteria for fixing gold and silver prices in the market. As per the practice, gold and silver prices are fixed in line with prevailing international price, selling price fixed by importer banks or other sources as well as exchange rate of major foreign currencies.
“We have also decided to initiate lobbying for more gold quotas as the existing quota is far lower than the market demand,” Shakya informed.
Gold traders have been maintaining that black-marketing of gold can´t be controlled unless the government doubles gold quota to 20 kg per day. According to a recent survey conducted by Negosida, daily gold demand hovers at around 35 kg.
Traders said market has suffered badly due to the shortage of the precious yellow metal at a time when demand for gold has soared to at least 25 kg per day with the advent of the festive season.
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