Gold prices crossed the six-digit figure mark on Friday, reaching Rs100,300 per tola in the domestic bullion market.
The bullion traders, however, said that the precious yellow metal prices are unlikely to scale a new record high, despite the sharp price surge this week. They said that the prices have already started declining.
On Friday, the gold prices were up by Rs600 a tola.
Tej Ratna Shakya, the former president of the Federation of Nepal Gold and Silver Dealers Association, said the gold price gains were prompted by the news of China easing some Covid-19 restrictions.
“The prices increased sharply, but it does not look like it will break the previous record of Rs105,500 per tola,” said Shakya. “However, it may hover around Rs100,000 per tola for some more time.”
The demand for gold, however, has skyrocketed in the domestic bullion market given the ongoing wedding season. The higher demand may last until mid-January.
“The demand had reached more than 50 kilos, daily. As soon as the prices began to rise, the purchases declined to around 20 kilos daily,” Shakya said.
The precious yellow metal prices reached an all-time high of Rs105,500 in March 2022 mainly due to escalating tensions between Russia and Ukraine.
According to international media reports, the spot gold prices touched $1,793.20 per ounce on Friday.
Shakya said that different countries seem to be increasing their gold stocks. China has recently purchased 32 tonnes of gold to increase its assets and it is being predicted that the Asian banks are also in the mood of purchasing more gold.
With no other lucrative investment avenues, the people have now started investing in gold as a safe haven due to which the prices are not easing, he added.
Shakya said that if the prices keep on rising, people may start dumping gold and cash out. For example, when the price of gold reached Rs100,000 in July 2020, many customers came to the bullion traders to sell their gold, he added.
In April 2020, Nepal Rastra Bank had slashed the daily gold import quota from 20 kg to 10 kg, in a bid to stem the outflow of foreign currency.
But responding to high demand, the central bank increased the quota to 20 kg on April 3, 2021, even though the bullion traders had urged it to raise the limit to 30 kg.
On March 6, the central bank again cut the daily import quota to 10 kg.
According to the Department of Customs, gold imports declined by 30.41 percent to Rs21.84 billion in the first four months of the current fiscal year.
Nepal has been importing gold from Dubai, Switzerland and Turkey. The country imported gold worth Rs42.69 billion in the last fiscal year.