Gold goes under hammer for third Tuesday, demand increases

The central bank today sold 100-kg gold for Rs 3.2 million per kg and 1000-kg silver for Rs 56,585 per kg.
However, the traders demanded 125-kg gold on the eve of Dashain, the greatest festival in Nepal.
Today the central bank has fixed the minimum price of Rs 3.18 million for per kg gold and Rs 55,835 per kg silver. "Today's minimum rate fixed by the central bank was comparatively lower compared to earlier Tuesdays," said Tej Ratna Shakya, president of Nepal Gold and Silver Dealers’ Association (Negosida).
Last Tuesday, the traders demanded 150 kg of gold but the central bank has fixed only 100 kg of gold the weekly quota for auction. Nepal Rastra Bank (NRB) has decided to auction 100 kg of gold and 1,000 kg of silver every Tuesday to meet the market demand after the government banned the import of gold and silver to discourage smuggling.
The central bank had planned to sell 75 kg gold through auction and 25 kg to non-bidders. A non-bidder has to pay the highest bidding price.
Due to the festive season, demand for the precious yellow metal in the market has soared encouraging the traders to bid high. "But the customers have to bear the burnt as the traders cannot sell the gold in lower rate then they have bought," Shakya said, adding that the price in the domestic market is Rs 1000 higher than the international price of the gold due to the higher bidders.
Meanwhile, the gold today was being traded for Rs 38,200 per tola (11.664 gram) while silver trading price is at Rs 680 per tola.
NRB fixes the minimum quote price with addition of taxes and Rs 1000 in the international market price. NRB has since second auction last Tuesday made some adjustments in its rules on the request of the traders.
Earlier, in the first auction, the traders were hesitant and the central bank on September 28 could sell only 8.74 kg gold for Rs 27.79 million and 31.31 kg of silver for Rs 1.77 million in the first-ever auction of gold and silver in its history. But in the second auction the traders demand has shot up to 150 kg for gold.
According to the traders, the price of gold in the domestic market has sht up mainly due to the impractical bidding process. "The bidding process is not practical, the NRB needs to make international standard bidding process," according to the traders. NRB should put a bench mark rate during auction.