Gold jumps to record high

Gold price jumped to record high, touching Rs 25,550 per 10 grams (Rs 29,800 per tola) in the domestic market on Monday. Bullion dealers said the increment has put off buyers on a shopping spree and threatened to hit business during the upcoming festive season.

The yellow metal became dearer by Rs 215 per 10 grams on Monday, compared to Friday when the market closed last week, and gold dealers attributed this jump to the devaluation of Nepali currency vis-à-vis US dollar.

Tej Ratna Shakya, president of Nepal Gold Silver Dealers Association (NEGOSIDA), said the international price of gold on the day had eased by about 50 cents per troy ounce compared to Sunday. "But still the domestic price shot up because Nepali currency weakened against dollar on the day," he stated.

However, knowledgeable people stated that Monday´s price hike was a foul play by the association, because Nepali currency actually had gained, and did not lose, as dealers claimed, against the dollar on the day. Foreign exchange records of Nepal Rastra Bank (NRB) too shows that Nepali currency gained 12 paisa against a dollar, compared to Sunday, and dollar was exchanged at Rs 77.85 on Monday.

Experts, however, agreed with dealers that Nepali gold consumers are presently bearing the twofold brunt of currency upheavals. For instance, gold price in the international market has soared because dollar has slipped against major rival currencies like Euro and Yen, and owing to this volatility, investors have preferred to switch to gold, thereby causing its price rise.

Contrary to this global trend, dollar has gained against Indian currency, with which Nepali rupee is pegged, over the last few days till Sunday. For Tuesday also, the central bank has announced that rupee will weaken by 47 paisa per dollar compared to Monday. “While former raised the international prices of gold, latter is making imports further expensive for Nepal,” said Shakya, who added that the rise in prices has dragged down the sales of gold in the domestic market.

According to NEGOSIDA, buyers have taken wait and watch policy since the last ten days when the prices of gold started to go up. "There are lots of enquiries but real purchase has gone down since the prices rose,” said Shakya.

Nepal´s bullion market becomes most vibrant during marriage seasons. Festive seasons like Teej, which was recently celebrated, and Dashain and Tihar, which are round the corner, are other major business days for dealers.

Given the sound growth in sales, which touched as much as 15 kg a day during Teej festival, dealers had anticipated the business to maintain this momentum. “But because of the price rise, sales has dropped to about 10 kg a day these days,” said Shakya.

Under normal circumstances, NEGOSIDA says consumption of gold in Dashain and Tihar increases by at least 25 percent over sales recorded in any regular business days.
Source:Republica