Print Edition - 2015-03-11 | MONEY
Gold falls to Rs 50,500 per tola
- stronger dollar
Mar 10, 2015-
Gold fell to a three-and-a-half-month low of Rs50,500 per tola in the domestic market on Tuesday. Bullion traders attributed the decline to a strengthening US dollar against major currencies.
According to the Federation of Nepal Gold and Silver Dealers Association (Fenegosida), this is the biggest drop in a session since December 1, 2014 when gold was traded at Rs49,800 per tola.
Tej Ratna Shakya, a special member of Fenegosida, said that the major reason behind the fall in gold prices was a depreciation of the euro and the yen against the greenback. “As the dollar has been strengthening against major currencies for the last few days, investors are turning to the dollar after selling gold. This low demand has been reflected in gold prices falling,” he said.
Gold traded at a three-month low of $1166.66 per ounce in Singapore on Tuesday.
Reuters reported that gold took a hit from Friday’s strong US non-farm payrolls data that boosted expectations that the Federal Reserve would begin increasing interest rates by the middle of the year. According to the data, US non-farm payrolls increased 295,000 last month after rising 239,000 in January. Other recent data on US private employment and durable goods orders has also hurt gold, it reported.
The US dollar hit 12-year highs against the euro on Tuesday on the growing chance of the Federal Reserve hiking interest rates by mid-year, the prospect of which also hurt stocks and currencies from emerging markets, according to Reuters. The euro’s woes were compounded by worries about Greece which is facing an economic crisis.
Shakya also said that falling oil prices also contributed to the fall in the gold prices. “When oil decreases, price of gold also falls down in the international market. Traders said that prices are likely to fall further as dollar will continue to see strengthening and weakening of euro.
Despite a fall in prices during the ongoing marriage season, traders have reported low sales. “We are seeing a 40-50 percent drop in sales compared to the same period last year,” said Shakya, who is also the proprietor of Tejmin Jewellery.
The country consumes 20-25kg of gold daily during normal times while demand surges to 30-40kg per day during the festive season, according to bullion traders.
The government allows commercial banks to import 20kg of gold per day.
However, bank officials have been complained that traders are not buying gold from banks, but getting their supplies through informal channels. On Monday, the police arrested nine people from the Kathmandu valley on charges of smuggling gold. Those apprehended included some key figures in the racket.
Published: 11-03-2015 06:49