Gold hit a two-year high of Rs55,800 per tola, surging Rs1,000 per tola on Friday as world stock markets tumbled, the Federation of Nepal Gold and Silver Dealers Association (Fenegosida) said.

The association said that gold prices had jumped Rs2,200 per tola over the week. On Sunday, the yellow metal traded at Rs53,300 per tola before dropping to Rs53,000 on Monday. It gained Rs1,000 per tola on Tuesday to settle at Rs54,000.

Rices remained stable on Wednesday and increased to Rs54,500 on Thursday.

Tej Ratna Shakya, former president of the association, said that falling world stock markets was the major reason behind the rise in gold prices as nervous investors turned to “safe haven” buying, pushing up demand for the yellow metal.

Spot gold surged more than $50 to $1,248 an ounce on Friday, according to international media reports. Shakya expects gold prices to increase further.

Meanwhile, the rise in prices has dampened demand in the domestic market. “Demand for gold has been going down significantly for the last three days with prices climbing,” said Shakya. Despite the wedding season being in full swing when a rush for bridal jewellery boosts demand, gold sales have been slow, he said.

Shakya added that daily demand for the precious yellow metal in the domestic market had dropped to 20 kg from 35 kg three days ago. Shakya said demand for gold started to fall since April 25, 2015 as the earthquake slashed the purchasing power of the people. Before the disaster, the daily requirement amounted to 50 kg.

However, demand has started to increase. According to the Department of Customs, gold imports amounted to Rs11.27 billion in the first six months of the current fiscal year. Shipments started to zoom after November.

The country imported 3,013 kg of gold during the period mid-July to mid-January, up from 466 kg during the same period in 2014-15. Nepal bought 1,950 kg of gold from the UAE, 400 kg from Turkey and the rest from other countries.

The increased imports have led to a sharp rise in the government’s revenue collection from Rs246 million to Rs1.26 billion during the review period.

Gold traders and bankers said the increase in imports was part of a government move to curb smuggling.