Demand for gold plunged 50 percent year-on-year during the period mid-January to mid-February. The wedding season, which occurs between mid-January and mid-March, is the peak gold buying period to make bridal jewellery.

According to bullion traders, the yellow metal hit a six-year high of Rs63,300 per tola (11.66 gram) last week, causing demand to slacken despite the wedding season.

As the price of gold rose above the Rs60,000 mark, demand started falling compared to the same period last year, said Tej Ratna Shakya, former president of the Federation of Nepal Gold and Silver Dealers’ Association.

Gold was traded at around Rs56,000 per tola during the same period last year, he said, adding that daily consumption amounted to 60 kg then. This year, sales have slowed to 25 kg daily, Shakya said.  

The price of the yellow metal rose in the last few weeks due to a US-China trade dispute. Prices are expected to go up further if the row is not resolved soon, said dealers. At the same time, the Nepali rupee fell against the US dollar which made gold more expensive for Nepali buyers.

As per the Federation of Nepal Gold and Silver Dealers’ Association, gold hit a record high of more than Rs63,000 per tola six years ago. Shakya said that if the price of gold crosses $1,350 per ounce in the international market, there are high chances of prices increasing further.

Gold was traded at $1,320 per ounce on Thursday.

Shakya added that with the price of 24 carat gold increasing sharply, customers were choosing to buy 22 carat gold. The wedding season continues for two more weeks, but gold sales are not expected to rise above current levels, Shakya said.

Transactions are not likely to increase till mid-March. People are buying less gold than they had planned because of the high price, and some are recycling their old jewellery, he added.

Gold was traded at Rs62,400 per tola on Thursday.