Wednesday, August 22, 2012

Gold hits Rs 58,050 a tola

The price of the precious yellow metal has rallied to yet another high in the domestic market on the improving prospects of the European debt crisis. Gold was priced at Rs 58,050 per tola (11.664 grams) in the domestic market.
The international bullion market saw gold reach $ 1,640 on positive cues of declining yields of European bonds following the possibility of the European Central Bank (ECB) taking concrete action to deal with the ongoing debt crisis, according to bullion analysts.
The demand for jewellery in the domestic market has also been hit due to the scaling gold prices despite the approaching festive seasons. “Increased prices have affected demand, and customers are preferring to recycle old jewellery instead of buying new ones,” said president of Nepal Gold and Silver Dealers’ Association Tej Ratna Shakya.
"However, we expect better demand during Teej and Dashain,” he added.
Recent rumours regarding the ECB’s attempts at capping Spanish and Italian borrowing costs alone led to Spanish, Italian and Portuguese yields going down and fuelled interest in gold, despite the ECB’s denial of any such step. On June 19, the domestic market had seen a record price of Rs 57,700 for a tola as the precious metal was priced at $ 1,630 per ounce in the international bullion market in the days following the Greek elections.
The appreciation of the dollar against the Nepali rupee has also caused the price of gold to surge even though gold is yet to hit $ 1,900 per troy ounce as it did in August 2011.
Due to the soaring prices against the mellowed down economic growth, the global demand for gold has shrunk in the second quarter of 2012 by seven per cent amounting to 990 tonnes, as compared to the corresponding period of 2011, according to the World Gold Council’s report.
The amount has gone down mainly due to lowered demand for jewellery in India and China which account for half of the world’s gold demand.

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