The price of gold has surged by Rs 800 per tola (11.664 grams) on a single day today, reaching Rs 56,500.
Gold prices rose to $1580 in the international bullion market, prompting the gold price in the domestic market to be fixed at Rs 56,500 per tola. The price had been fixed at Rs 55,700 per tola, on Friday, as the yellow metal reached a 11-month low in the international bullion market to $1,540 per troy ounce.
The higher dollar exchange rate has also made gold expensive. The Nepali rupee has weakened to Rs 87.4 per US dollar that also contributed to the price of gold increasing.
The lacklustre job reports of the US also pulled investors back to gold pushing its price up. The Labour Department reported that the US economy added just 88,000 jobs in March, signalling that the US Federal Reserve will prolong its Quantitative Easing — buying. The improved US economy with higher employment rate and consequent surge in stock prices and dollar exchange rate had led investors away from defensive instruments such as gold.
However, demand for gold has yet to be stimulated – in the domestic market – as the wedding season has not begun.
Domestic consumers do not rush to buy gold when prices are falling in expectation that it will further drop. The current market demand is about 30 kg per day, 15 kg more than the amount allowed to import per day.Nepal imported gold worth Rs 15.1 billion in the first half of the current fiscal year. The government allows only banks to import 15 kg gold per day. Traders have been asking the government to increase the quota saying that supply is not enough to meet daily demand.