Gold imports have increased in the current fiscal year, but businessmen say that consumer demand has decreased due to high prices and business is only half of last year's.
What you should know
In just four months of the current fiscal year, gold worth Rs 15.72 billion has been imported. According to the Department of Revenue, Rs 1.57 billion has been collected as revenue from these imports.
In the same period of the last fiscal year, gold worth Rs 1.42 billion was imported. The department has data that Rs 285.5 million was earned from the gold import. Gold imports have increased sharply in the first four months of the current fiscal year, and the price of gold is also increasing.
Gold worth Rs 17.12 billion was imported throughout the last fiscal year.
Analysts say that the price of gold has increased due to central banks around the world prioritizing diversification instead of dollar reserves, shrinking other investment sectors, and gold still being seen as a safe investment, as well as strong demand in India, one of the world's largest gold consumers.
On Friday alone, the price of gold increased by Rs 2,200 in a single day. The price of gold per tola has reached Rs 250,600, according to the Nepal Gold and Silver Merchants' Federation. According to the federation, gold, which was traded at Rs 248,400 per tola on Thursday, reached Rs 250,600 on Friday.
The federation has data that after a total of 14 trading days, the price of gold has again exceeded Rs 250,000 per tola. Earlier, on Kartik 27, the price of gold was Rs 250,200 per tola. Since then, the price has been increasing and decreasing, but it has not reached Rs 250,000.
The federation determines the price based on the international market as 75 percent and the Indian market as 25 percent. The market price is determined by taking the international market price, the dollar exchange rate, customs rate and 1 percent profit (50 percent for banks and 50 percent for traders). The federation has stated that the price of gold is increasing due to the continued attraction towards gold in the international market and this has also affected the Nepali market.
Investors are attracted to gold as it is seen as a safe investment, and the price is also high, said Kiran Bhai Bajracharya, general secretary of the Federation. 'The investment environment has not been created in the international market, investors are being attracted to gold as it is seen as a safe investment,' he said, 'The price is continuously increasing as investors are worried.' He also said that some countries, including China, have not stopped increasing their gold reserves.
Experts say that the price of gold may increase further as the world's central banks are expecting a cut in interest rates in December. 'Investment in gold is increasing as interest rates are falling, and investors are being attracted to gold due to the lack of an environment to invest in other sectors, including the stock market,' Bajracharya said, 'If interest rates increase internationally and geopolitical tensions decrease, the price of gold may decrease.'
Gold price 250,000 per tola Even though investors are increasing as the rupee reaches the market, businessmen say that consumer demand has not increased during the season. 'When the price of gold increases, gold trade has not increased during the season. The amount of gold work that used to be done, there was trade. This year, it has not been done to that extent,' Bajracharya said, 'Gold trade in this Mangsir is not even 50 percent compared to last year. There are also fewer weddings in Mangsir. The price of gold is increasing. That is why demand is low.'
Even though it is the season for buying and selling gold, Bajracharya said that there is only demand for low-weight gold items. 'Earlier, a single family used to make gold ornaments worth 10 to 20 tolas for weddings, now they are working on 2 tolas or 3 tolas,' he said, 'That is why gold consumption is decreasing.' Bajracharya said that earlier they used to make 1/2 tola gold bangles, but now they only make four annas/half tola.
Nepal Rastra Bank has also increased the gold import quota in Asoj, targeting the festivals. The Rastra Bank has increased the daily quantity of gold that can be imported from 20 kg to 25 kg. In Nepal, only commercial banks can import gold. Gold imported by banks is available to entrepreneurs on the recommendation of the jewelry entrepreneurs' association, federation, and organization. Entrepreneurs say that more imports have been seen since the Rastra Bank has increased the quantity of gold that can be imported.
