Thursday, June 20, 2019

Gold price hits record high of Rs 64,000 per tola

The price of precious yellow metal has increased to a record high today in the domestic market due to spike in the price in international markets, which has hit the domestic consumers in the ongoing wedding season hard.
The price of hallmark gold rose by Rs 1,000 per tola (11.664 grams) in a single day today to trade at Rs 64,000, according to the Federation of Nepal Gold and Silver Dealers’ Association (Fenegosida). “Yesterday, the bullion was traded at Rs 63,000 per tola.”
The price of precious yellow metal has also been moving up since the budget – announced on May 29 by finance minister Dr Yuba Raj Khatiwada – when the import duty was jacked up by Rs 800 per 10 grams. Gold become dearer by Rs 4,500 per tola in two weeks.
“The federation that fixes the reference price for gold in Nepal also increased the price today morning due to price hike in the international market,” past president of Fenegosida Tej Ratna Shakya said, adding that the committee fixed the price of gold for Nepali dealers in line with the international price while also factoring in the exchange rate and profit margin. “The price, which is disclosed at 10:30 am every day, remains in place until the next day, if it does not move by $10 upward or downward.”
If the gold price is changed – upward or downward – by $10 in the international market, the price in the domestic market is also changed, which has happened couple of times in the past, he added.
The weakening dollar and fall in treasury yields after the Federal Reserve – the US central bank – yesterday left the interest rates unchanged, which has pushed the price of yellow metal in the global market, the Shakya said, adding that last time on February 20, the gold price had climbed up to Rs 63,300 per tola. “Likewise, the gold price touched Rs 64,000 per tola, on March 8 this year, and on August 28, 2013.”
The hike in customs duty also made gold more expensive, he said. “The Department of Customs said that the duty was hiked to match bullion prices in the Indian market to prevent smuggling.” Gold was relatively cheaper in Nepal before the budget statement.
The investors’ rush to buy gold – an attractive investment option when interest rates and dollar are on a downward trend – is driving up demands of the precious yellow metal across the globe specially in India and China that is also one of the reasons of gold price spike. International bullion traders have estimated that gold will touch $1,400 per ounce by the end of 2019, and it has already reached $1,380 per ounce, Shakya said.
The escalating trade war between China and the US apart from the US-Iran tensions has also pushed the precious yellow metal price up as many investors tend to make investment in gold as a hedge against any downside risk in capital and equity markets.
According to reports, the trade war between China and the US could turn into a currency war, further boosting investor demand for gold. “The rise in gold price has pushed down demand in the local bullion market,” Shakya said, adding that the gold sales which used to amount to 35 kg daily during this time of the year in the past have shrunk to 25 kg as the demand falls sharply when prices cross Rs 60,000 per tola.

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