Gold continues freefall, hits Rs 49,800 per tola

- POST REPORT, Kathmandu
Gold continues freefall, hits Rs 49,800 per tola

Nov 3, 2014-

Gold continued its freefall on Monday losing Rs 200 per tola to close at Rs 49,800. The yellow metal hit a 19-month low as international prices took a dive with investors turning to stocks, said local bullion traders.

Gold was down Rs 500 per tola (11.66 gm) on the previous day, and has lost Rs 3,000 per tola over a week. According to the Federation of Nepal Gold and Silver Dealers Association (Fenegosida), this is the biggest drop in prices since April 17, 2013 when gold sank to Rs 49,500 per tola.

“With an improving US economy, investors are turning to shares so prices have been falling in the international market,” said Tej Ratna Shakya, former president of Fenegosida. He added that as the Nepali rupee was pegged with the Indian rupee, an appreciation of the US dollar against Indian currency also leads to a drop in prices.

According to Nepal Rastra Bank, the greenback was valued at Rs 98.55 on Monday.

Similarly, gold traded at $1,172 per ounce in the international market on Monday against $1,174 on Sunday. Prices on Friday were $1,194 per ounce. Global media reported that gold prices were likely to fall further in the coming days. Manish Pradhan, president of the Nepal Gems and Jewellery Association, said that falling oil prices were also one reason behind the decline in gold prices.

“The gold market has always been volatile as it has a direct relation with the US economy,”

he said. “Investors have been losing confidence in gold these days, but we can’t say when prices will start increasing.”

Traders said that gold sales were low despite the massive drop in prices. “It seems customers are in a wait-and-watch mode though the wedding season is nearing,” said Shakya. “Nepali customers usually start buying whenever prices start to climb after a sharp fall, so we expect sales to happen later.”

Meanwhile, amid reports that commercial banks have 338 kg of unsold gold, bullion traders met with the Bankers Association of Nepal to discuss how to simplify purchases of the yellow metal from banks.

“Commercial banks have been providing a very small profit margin which doesn’t even cover the cost of labour, so traders are not buying gold from them,” said Mani Ratna Shakya, president of Fenegosida. He added that they were getting their requirements of the precious metal from air travellers and customers recycling old jewellery.

Published: 04-11-2014 09:21

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