Gold price today soared to a yet another record high — Rs 52,250 per tola (11.664 gram) in the domestic market — stoking fears that it could dull the glitter and glamour of Teej, a festival for Hindu women, that is about 10 days to come.
With gold price touching a new high every day, many believe the festival could not be as joyous Yesterday the precious yellow metal was traded for Rs 50,700 per tola and the domestic market witnessed a jump of Rs 1,550 per tola in a day due to fears of a global double-dip recession that sent investors piling into gold.
Last year, during Teej the sale of gold jumped up to 40 kg per day from a normal 30 kg per day demand. "But the continuous rise in the price of gold has compelled the consumers drop their idea of buying gold jewellery even during the festivals," said Nepal Gold and Silver Dealers Association president Tej Ratna Shakya.
"The demand has dropped to less than 10 kg due to 'unbelievable' price," he said, adding that there is only 25 per cent demand in the market.The domestic market witnessed a rise of Rs 15,750 per tola in a year as on August 19, 2010 — last year today — the gold was traded at Rs 36,500 per tola.
The gold import — that has hurt the Balance of Payment in the fiscal year 2009-10 by recording a Rs 41.63 billion — has also dropped by over four times to Rs 9.07 billion in the first eleven months of fiscal year 2010-11 from Rs 39.40 billion in the same period a fiscal year ago, according to the central bank.
In the international market, the precious yellow metal prices have risen more than five per cent in just a week as investors gobble up the metal as protection against slowing global growth from China to Germany to the US. A day after Morgan Stanley lowered US growth prospects for 2011 and 2012, gold prices showed no signs of slowing down but experts warn that time may be up for the current rally.
Gold’s strong start to the year was reinforced during the second quarter of 2011 where total global gold demand measured 919.8 tonnes, worth a near-record $44.5 billion, with broad-based support across all sectors and geographies especially India and China, as these two markets accounted for 52 per cent of total gold bar and coin investment and 55 per cent of global jewellery demand.
According to the Gold Demand Trends report for second quarter of 2011, gold demand will remain strong owing to a number of key factors despite a higher gold price.
"Indian and Chinese demand grew by 38 per cent and 25 per cent respectively during the second quarter of 2011 compared to the same period of a year ago," the report said, adding that the growth is likely to continue, due to increasing levels of economic prosperity, high levels of inflation and forthcoming key gold purchasing festivals.
The impact of the European sovereign debt crisis, the downgrading of US debt, inflationary pressures and the still-fragile outlook for economic growth in the West are all likely to drive high levels of investment demand for the foreseeable future.
Central banks are also likely to remain net purchasers of gold as purchases of 69.4 tonnes during second quarter of 2011 demonstrated that central banks are continuing to turn to gold to diversify their reserves.
Not only the traditional Hindu society, but in most cultures at some point had a practice of keeping large amounts of wealth stored in the form of gold jewellery as jewellery has been used as a currency or trade good.
One of the oldest metals on the earth as gold was known to man even before 3600 BC, mankind has been obsessed with the luster of gold and lost their minds on the glitter of gold mesmerised by its yellow beauty.
Meanwhile, silver also touched a new record of Rs 1,175 per tola in the domestic market today.
Import of precious yellow metal drops
2008-09 — Rs 13.38 billion
2009-10 — Rs 39.40 billion
2010-11 — Rs 9.07 billion
(All figures are of eleven months of fiscal years. Source: Nepal Rastra Bank)
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