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Kathmandu Thursday February 28, 2002 Falgun 16, 2058.
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Gold price surges to touch 3-yr high
Post Report
KATHMANDU, Feb 27 :
Spurred on by the soaring international gold price and continued tumbling of the Nepali
rupee against the greenback, the price of gold in the domestic market has climbed once
again to touch the highest mark in the last three years.
The domestic gold
price, which was stable at Rs 7,715 per ten gram for a week surged to Rs 7,725 Tuesday and
again climbed by Rs 80 Wednesday to touch Rs 7,800 per ten gram.
The international gold
price, which had been soaring slightly since last couple of days recorded another
unprecedented jump Wednesday to touch almost US$ 298 per troy ounce (1 troy ounce=31.103
gm) from around US$ 292 Tuesday, recording an overnight surge of US$ 6 per troy ounce.
During the last
upheavals in the international gold market witnessed some two weeks ago, the gold price
had touched US$ 306.65 per troy ounce hitting a two-year high mark.
Similarly, the
continuing depreciation of the domestic currency against the American dollar is another
major reason behind the price surge. The Nepali currency has depreciated by 1.3 percent in
2002 against the US currency. Since Nepal imports all yellow metal by paying in
convertible currency, any slide in the value of the Nepali currency directly cause gold
price to rise.
Gold traders say that
the continued poor performance of the stock market around the globe is one of the main
reasons behind the continued high demand of gold. Investors, shocked by the sudden crash
of the energy giant Enron, which led to a huge financial loss, are yet to regain their
confidence in the stock market. And, the investors are still financing on gold as the best
and reliable alternative investment sector.
Similarly, poor
performance by the Japanese economy added fuel of fire in the erosion of investors’
confidence. Though, some silver lining has emerged on the possible revival of the
world’s second largest economy, it is still far below the level to influence
speculative investors’ confidence. Gold traders opine the gold price might climb
further since quick revival of the rival assets such as stocks and hard currencies in the
global market seems remote.
However, the impact of
the gold price hike on the domestic gold market this time has been different from the past
trend, thanks to the ongoing marriage seasons, during which, gold demand surge.
"The overall
demand of gold in recent days has increased as compared to the demand of the past months
mainly due to the marriage seasons," says Tej Ratna Shakya, President of Nepal
Gold-Silver Dealers Association.
However, he was quick
to say that the current high demand will be short-lived since the season will end soon.
"The actual market condition would be visible only then," he added.
During the similar hike
witnessed some two weeks ago, the average consumption had declined to remain at less than
half the normal demand. According to the concerned entrepreneurs, the average normal
national demand of gold in Nepal stands at 30 kg per day.
Along with the soaring
gold price, gold traders are facing another headache. The sale of old gold stock and
ornaments has skyrocketed in the past few days. Along with soaring demand of fresh gold,
people’s turnout to sell their old gold stock and ornaments has increased massively,
says Tej Shakya. "The transaction of old gold currently stands at around 35 per cent
of the total gold transaction," Shakya adds.
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