Print Edition - 2014-08-09 | MONEY
Gold hits new high of Rs 55,300 per tola
Aug 8, 2014-
Gold prices hit a four-month high due to swelling demand from jewellery traders and rising prices in the international market. Hallmark gold surged Rs 550 per tola to settle at Rs 55,300 per tola (11.66 gm) in the domestic market on Friday. Meanwhile, silver prices inched up Rs 5 to Rs 825 per tola.
According to the Federation of Nepal Gold and Silver Dealers’ Association (Fenegosida), the last time the yellow metal climbed to a record high was on March 24 when it reached Rs 55,400 per tola.
Fenegosida President Mani Ratna Shakya said that the bullion market had started to rebound after fluctuating for the past few months. “As many Hindu women have been buying gold jewellery for the Teej festival, demand jumped around 25 percent especially from jewellery makers,” he said.
“At the same time, prices have been climbing in the international market as investors are turning to gold as a safe haven after worries over economic weakness in the euro zone and tensions between Russia and the West.”
The yellow metal traded at $ 1,300 per ounce in Singapore on Friday. People usually switch to gold when they see a risk in stocks. The international media reported that the equity market started to fall creating demand for gold in the world market.
Currently, tit for tat sanctions between Russia and the West have discouraged investors from putting money in stocks as many economies are vulnerable to
According to traders, costlier imports also contributed to making gold dearer besides rising international prices and increased demand from festive buyers. A weaker Indian rupee, to which the Nepali rupee is pegged, makes imports costlier. The Indian rupee has been falling against the US dollar.
Bullion traders said that high demand in the domestic market is also likely to affect prices in the days ahead. “The flow of smuggled gold seems to have slowed after the Sunkoshi flood damaged the highway to the Chinese border. Nepal Rastra Bank has also decreased the gold import quota for commercial banks to 15 kg daily from 20 kg. These developments could lead to a scarcity of gold during the festival season,” said Tej Ratna Shakya, proprietor of Tejwin Jewellery on New Road.
“Prices could go up further in the international market due to geo-political tensions after US President Barack Obama authorised air strikes against Iraq,” he added.
However, traders said that gold was being sold for less than the official rate set by Fenegosida due to the availability of cheaper contraband. The market rate is Rs 800 to Rs 1,000 lower than Fenegosida’s listed price.
Chief Executive Officer of NMB Bank Upendra Poudel said that traders had stopped buying gold from them for months, and that it was only recently that inquiries had started coming. “We sold just 1 kg of gold on Thursday, and the inquiries on Friday did not convert into sales,” he added. “We have not imported gold due to lack of demand.”
The daily gold requirement of the local market is 20 kg during normal times. It expands to 30-40 kg during the festival season, said traders.
Published: 09-08-2014 10:21