Gold plunged Rs 1,000 per tola on Tuesday as world prices tumbled with investors turning away from the yellow metal and moving towards stocks. Bullion traders said the fall in prices would help boost sales of the yellow metal as the wedding season was underway.
Gold has been going downhill for two consecutive days this week. On Monday, the price had decreased by Rs 300 per tola. The precious metal was traded at Rs 52,700 per tola on Tuesday, down from Rs 53,700 per tola on Monday.
International trends strongly influence local gold prices. On Tuesday, gold prices in the international market fell US$ 27.8 per ounce. Gold was traded at US$ 1219.70 per ounce on Tuesday, down from US$ 1247.50, according to the international media.
Market watchers attributed the sharp fall to investors abandoning gold in favour of the share market with the strengthening of the US economy.
Meanwhile, the fall in prices has brought cheer to local buyers during the ongoing marriage season when sales of the precious metal jump due to massive purchases for making bridal jewellery. According to the Federation of Nepal Gold and Silver Dealers Association (Fenegosida), daily sales have surged to 35-40 kg from 30-35 kg last week.
Despite the surge in sales, traders have complained that the central bank has not allowed banks to import adequate amounts of gold . The central bank has fixed a daily quota of 20 kg for domestic consumption. Traders said that the quota system had given rise to informal trading of gold in the market.
Tej Ratna Shakya, special member of Fenegosida, said the quota imposed by Nepal Rastra Bank had given rise to black marketing. According to Shakya, the domestic market’s daily requirement of gold stands at 15-20 kg per day in normal situations which rises by 50 percent during the wedding season.
He said that the central bank’s import quota of 20 kg a day was not sufficient during the wedding season. Gold demand picked up on Tuesday due to the fall in prices, according to traders.
Bikash Jodhani, director of Jay Mata Di Gold Palace at Bishal Bazaar, said wedding shoppers were thronging gold shops but they were still watching the fluctuating market prices.” Traders said people were waiting for prices to fall further.
Meanwhile, silver prices also fell Rs 25 per tola. The white metal was traded at Rs 835 per tola on Tuesday against Rs 860 per tola on Monday on the domestic market. (eKantipur.com)