Gold price surges by Rs 4,322 in a month

The price of gold has surged by Rs 4,322 a tola (11.664 grams) in a single month breaking one record after another in the domestic market.

Today, the yellow metal was priced at Rs 61,120 a tola, while a month back — on August 9 — it was priced at Rs 56,798 per tola. Gold prices have been skyrocketing globally on the possibility of another round of monetary expansion by the US.

On August 9, gold was priced at $1,617 an ounce, while on September 8, it went above $1,730 in the international bullion market. Domestic pricing has been affected by not only the increasing global prices along with the appreciation of the dollar, but also by a shortage of gold in the market.

“Despite the quota of 20 kilo per day fixed by the government, jewellers have not been able to get enough gold even to make ornaments since some time,” said senior vice president of Nepal Gold and Silver Dealers’ Association Mani Ratna Shakya.

He said that regulatory bodies have failed to regulate how buyers are using the gold purchased from the banks despite recommendations from bullion related associations.

With the approaching festive season – especially before Teej – sales of jewellery have been affected due to the rising price. In previous years, the demand for gold in this season used to surpass 35 kg a day.

The price of the yellow metal is expected to rise further as the recent US employment data is not encouraging and there are expectations of further monetary easing by the Federal Reserve (Fed).

The Fed might decide to launch a third round of government bond buying to lower interest rates to stimulate the economy. These moves mean the US Treasury will print more money leading to inflation.

Investors are buying gold and other precious metals to hedge against expected inflation. Likewise, investors have fled from investing in stocks and bonds due to dark economic prospects and are planting their investments in safe haven investments such as gold further nudging its price upward.