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Kathmandu Tuesday March 05, 2002 Falgun 21, 2058.
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Gold price surges to touch
5-yr high
Post Report
KATHMANDU, March 4 : Spurred by the soaring
international gold price, in addition to the tumbling Nepali rupee, the price of gold in
the domestic market has climbed once again to touch the highest point in the last five
years.
The domestic gold price, which was hovering at
around Rs 7,840 per ten gram last week, surged to touch Rs 7,900 per ten gram today. The
highest gold price observed during the last five years was Rs 7,970 in November 1996. An
all time high was witnessed on 8 February 1996, when the market gold price touched Rs
9,040 per ten gram.
The international gold price, which had been
soaring since the last couple of days recorded another unprecedented jump today to touch
almost US$ 299.55 per troy ounce (1 troy ounce=31.103 gms) from around US$ 295.90 last
week.
Gold traders predict that the international gold
price may touch US$ 300 per troy ounce Tuesday resulting in a surge in domestic gold price
to Rs 7,920 per ten gram. A dollar increase in gold price leads to a corresponding
increase of Rs 20 per ten grams in the domestic market.
Gold traders attribute the slackness in the
global stock market and fledging Japanese economy as the major reasons behind its price
hike. Eroded confidence on stock is prompting investors to turn to gold as the best
alternative for investment.
Similarly, the series of 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 greenback.
Since Nepal imports all yellow metal by paying in convertible currency, any slide in the
value of the Nepali currency directly leads the price to rise.
However, the impact of the gold price hike on
the domestic gold market this time has been different from the past trends, thanks to the
ongoing wedding season, during which gold demand surges. "The overall gold demand has
increased as compared to the last month’s figure due to the wedding season,"
says Tej Ratna Shakya, President of Nepal Gold-Silver Dealers Association.
However, in the same breath, he reiterated that
the current high demand would be short-lived as the wedding season will end soon.
"The actual market condition would than be visible only then," he added.
During the similar unexpected last month’s
upheavals, the average daily demand of gold had plunged 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.
However, gold dealers are in a dilemma since
high demand for fresh gold is simultaneously accompanied by people’s heavy turnout to
sell their old gold stock and ornaments.
"The transaction of old gold currently
stands at around 35 per cent of the total gold transaction due to which we are
increasingly facing difficulties in making hard currency against the sale of old gold
stock and ornaments," says Niranjan Shakya, former president of Nepal gold-Silver
Dealers Association.
He further said that gold traders have already
started facing a cash-crunch situation due to the recent trend. "Gold traders need to
think on alternatives to withstand the new challenge," he added, indicating a
possible down revision in the current purchasing price of gold to discourage consumers to
sell-out their old gold stock.
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