Gold prices hit a four-month high in the local market on Sunday and is likely to rise further and make a new record, bullion traders said.

Gold price closed at Rs63,000 per tola on Sunday. Gold has hit a record high of Rs63,000 per tola on only two occasions, on March 8 this year and on August 28, 2013.

Nepali gold traders said that the US-China trade war has lifted gold prices globally and it looks to increase further if the trade war escalates. According to reports, the ongoing trade war could turn into a currency war, further boosting investor demand for gold. The trade war will send investors towards the safe haven of gold.

Furthermore, the hike in customs duty by the government has also made gold prices dearer. Domestic prices are mainly fixed on the basis of prices in the international market.

Tej Ratna Shakya, past president of the Federation of Nepal Gold and Silver Dealers Association, said there is possibility of price rising further if the US-China trade war does not settle down.

The association said the precious yellow metal was at Rs62,300 on Thursday. The price increased by Rs700 per tola in a single day to close at Rs63,000 per tola on Friday. It closed at Rs63,000 on Sunday.

The annual budget that was announced on May 29 had hiked the customs duty on gold by Rs800 per 10 grams.

The Department of Customs said that the gold duty was hiked to make the gold price on par with the Indian market in order to stop smuggling. The gold price was relatively cheaper in Nepal before the budget announcement.

The rise in the gold price has reduced the demand in the local bullion market. Gold business which used to reach up to 35 kg daily during this season has been reduced to 25 kg, Shakya said.

“The gold demand falls sharply when prices cross Rs60,000 per tola,” said Shakya. “Gold demand currently has been reduced by 44 percent during the peak season,” he said. The mid-June to mid-July is considered to be one of prime season for gold trading due to weddings.

Though traders expected a rise in demand for the precious yellow metal, the ongoing season yielded negative responses from the buyers, he said.

According to Reuters, gold was trading 1.01 percent up at $1,357.30 an ounce on June 14. Premiums in top gold consumer China, still engaged in an exacerbated trade war with the US, rose to $10-12.50 an ounce over the global benchmark from $7-$10 in the previous week. Gold is considered a safe haven, and prices rise at a time of political turmoil.