KATHMANDU: As festivals like Dashain, Tihar, and Chhath approach, gold trading is experiencing a slowdown.
Businessmen report a decline in gold transactions as prices continue to rise daily.
Typically, gold sales peak during festive occasions such as wedding seasons and Teej.
However, the persistent price increases have made consumers hesitant to purchase.
Compared to last year, gold transactions during this year’s festival season are noticeably lower.
At this time last year, daily gold trading reached up to 25 kg, whereas currently, only 12 to 15 kg is being bought and sold, according to Arjun Rasaili, President of the Nepal Gold and Silver Traders Federation.
Rasaili noted that many customers now prefer to redesign their existing gold rather than buy new pieces. “Currently, 12 to 15 kg of gold is being traded daily in Nepal,” he said.
Last year, about 20 kg of gold was imported each day, and the old stock was sufficient to meet demand.
The increase in gold prices in Nepal cannot be attributed to a single factor. Businessmen cite several influences, including international banking trends.
Business thrived as travelers returning from abroad often brought gold during the festive season.
However, despite the impending festivities, no improvement in gold business has been observed this year, with a similar decline noted during last year’s Teej.
Currently, approximately 20 kg of gold is imported from abroad daily, but traders report that a lack of transactions has led to gold accumulating in banks.
In India, the gold duty stands at 6 percent, while in Nepal, a 20 percent customs duty has driven prices higher. Rasaili mentioned that over 180 kg of gold is currently deposited in banks.
“When the 20 percent customs rate was implemented, gold prices soared in Nepal.”
Businessmen have been vocal about their opposition to the customs rate increase.
While they typically see a surge in business during the festive season, they have already withdrawn some of the gold stored in banks.
Rasaili indicated that only 30 kg of gold remains in the bank, as the federation has advised banks to halt gold purchases until the customs rate is revised.
Previously, the customs rate was 15 percent, but it was increased by 5 percent in the current fiscal year’s budget.
Businessmen have consistently called for a reduction in the gold import customs rate, submitting a memorandum to the former Finance Minister Barshman Pun last May.
However, the government has shown little willingness to reverse this decision promptly.
Gold and silver traders anticipate that prices will continue to rise in Nepal. Rasaili predicts that gold could reach Rs 180,000 per tola within the next 5 to 6 months if the customs rate remains unchanged.
Rasaili warned that if the government does not lower the customs rate, gold and silver traders may be forced to strike.
Factors Behind Rising Prices
The increase in gold prices in Nepal cannot be attributed to a single factor. Businessmen cite several influences, including international banking trends.
For example, European national banks have recently lowered interest rates, and the US central bank is considering similar measures.
“When international banks reduce interest rates, investment in gold rises, driving prices up,” Rasaili explained.
In Nepal, although local banks have also lowered rates, there remains little enthusiasm for investing in gold.
Geopolitical factors, such as the Russia-Ukraine conflict and unrest in the Gaza Strip, have further impacted gold prices.
Additionally, fluctuations in the US dollar exchange rate have a direct influence on local gold prices.
Predictions for the Future
Gold and silver traders anticipate that prices will continue to rise in Nepal. Rasaili predicts that gold could reach Rs 180,000 per tola within the next 5 to 6 months if the customs rate remains unchanged.
“If the customs rate is not reduced, we expect a further decline in business and an increase in prices,” he cautioned.
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