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Volatility in the price of gold, how much will the price reach?

Due to the strong dollar in the international market, investors increased their investment in gold, due to which the price decreased, and the international market is forecast to reach 2500 dollars per ounce.
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The price of gold is making one record after another after increasing investment in gold, known as a safe investment. Last Friday, the price of gold reached Rs 139,300 per tola, but on Sunday, it remained stable. In other words, gold and silver business federation said that the transaction was done at 1 lakh 39 thousand 300 rupees per tola. On Monday, per tola decreased by 1100 to 1 lakh 38 thousand 200 rupees.

Volatility in the price of gold, how much will the price reach?

When comparing the prices of the week, gold traded at 136 thousand 800 rupees per tola last week on Sunday (May 2), on Monday (3rd) it increased to 137 thousand 500 rupees per tola. On the third day, Tuesday (4th), making a new record, per tola was traded at 1 lakh 39 thousand 200 rupees. On Wednesday (5th), the price remained stable. On Thursday (6th), the price of gold decreased to 1 lakh 38 thousand 600 per tola. On Friday (7th), the price increased again to 139,300 rupees per tola, according to the federation.

Why the volatility in the price of gold? According to experts, the price volatility is caused by the war between Russia and Ukraine and between Israel and Hamas, weak inflation, and rumors that the US Central Bank (Federal Reserve Bank) will reduce interest rates. This is the reason why the price of gold is fluctuating in the international market. According to the Federation, it is also projected that per ounce will reach up to 2500 dollars in the international market. International market prices are unstable. The price has gone down and there is uncertainty," said Dharamsundar Bajracharya, Secretary General of the Nepal Gold and Silver Traders Federation, "international investors have been attracted to gold due to the war seen in various countries and the interest rates of banks. It has a direct impact here.

When the federation set the price last Friday, the price of gold per ounce was traded at 2379 US dollars in the international market. According to that, 1 lakh 39 thousand 300 rupees per tola was fixed in the Nepalese market. In the international market, it reached 2400 dollars and fell to 2380 dollars. The market remained closed on Saturday. On Sunday, when the price was fixed at 139 thousand 300 rupees per tola, it reached 2392 dollars per ounce in the international market. It traded down $21 to $2371 an ounce on Monday. Here too, the price has decreased by Rs 1100 per tola.

Confusion has been seen in the price of gold mainly due to 5 reasons. The first reason is inflation. Tejaratna Shakya, the former president of the federation, says that the dollar is not strong in the international market. That is why the bank also tried to increase the gold balance. As the currency weakened, international investors started investing in gold. That is the reason why the price of gold has started to rise. The second reason is geopolitical conflict. There was a war between Russia and Ukraine and Israel and Hamas, and recently war has started between Iran and Israel.

"In such a situation, investors were attracted to gold," said Shakya, who is also the coordinator of the price determination committee under the federation, "which helped the price increase." The third reason for the price increase is uncertainty about the interest rate of the American central bank (Federal Reserve Bank). According to Shakya, if the current interest rate is 5 percent, it was said that the loan interest rate will be reduced 3 times by 2024. But the interest rate has not decreased. Investors have increased the demand for gold due to the expectation that the price of gold will increase when the interest rate falls. Shakya said that Switzerland has reduced the interest rate by 0.25 percent. The European Common Market has said that interest rates will not be reduced. The

is the fourth reason, the central bank of the world. These banks have also increased their gold reserves compared to the past. The Federation says that the price has increased because of that. The Central Bank has increased the balance by 19 tons in 3 months (January to March). That's why the price went up, said Shakya.

The fifth reason is the increased demand in India and China. A lot of gold is consumed in these countries. The two countries have increased gold purchases. The market is uncertain, the market is increasing due to rumours. There has been fluctuation by 40/50 dollars daily," said Shakya, "The dollar is also going down. Therefore, increase investment in gold rather than dollars. According to Shakya, the international market is forecast to reach 2500 dollars per ounce. Shakya claims that when it reaches 2500 dollars in the international market, it will reach 1 lakh 50 thousand rupees per tola in the Nepali market. According to the federation, looking at the current market, it is unstable. The prices are fluctuating in the international market. On Monday, prices were trading at $2371 per ounce in international markets. By Monday evening, the price in the international market fell to 2360 dollars.

As the price is fluctuating in the international market, the Federation has said that the price has been determined mainly based on the US and Indian markets. According to Shakya, who is also the coordinator of the pricing committee under the federation, the price is determined on the basis of 75 percent for the international market and 25 percent for the Indian market. 15 percent customs duty is added to it. 1 percent is allocated to the profit title of banks and jewelers.

"One percent is 50 percent to the bank and 50 percent to the businessman," Shakya said. But when selling jewelry, businessmen charge more. They have been selling at higher prices in the name of wages and benefits. The Federation has fixed Rs 1 lakh 38 thousand 200 per tola on Monday. Businessmen add an additional 12 to 18 percent as wages. On an average of 15 percent, common people have paid 158,000 more when buying one tola. But ordinary people do not get the same price when selling old jewelry.

Gold is not in the market

Banks did not import gold for one and a half months since February 22 when gold started piling up in banks. According to the Nepal Bankers Association, the balance was up to 196 kg till the end of February. After the increase in prices, the businessmen requested not to import, and the bank also stopped the import. Some banks themselves do not import gold after stockpiling gold in the bank. Depositing in the bank is insurance, there is risk of price fluctuations. When gold is in the bank, the holding charge increases. There is also insurance. That is why banks do not import.

In the past few weeks, the bank's gold has been drained. According to businessmen, there is no gold in the market. With 117 kilos of gold in stock, gold was withdrawn from the bank within two days due to rumors that the price would increase further. As there was no gold in the market, we asked them to import it," Shakya said. "Last Friday, NIC Asia and Krishi Bikas Bank imported 50/50 kg of gold. But the bank didn't buy it after charging a higher price. According to him, after importing on Friday, the bank tried to sell the businessmen at the same price on Monday. But in the international market, prices fell on Monday. "The gold could not be collected after the bank tried to charge a higher price," he said, "there is no gold in the market now."

According to government regulations, traders can only sell gold jewellery. Common people can also buy only jewellery. But recently, the demand for gold bars has increased more than jewelry, according to the federation. Former President Shakya said that ordinary people came to look for gold nuggets as a safe investment like abroad. "In the past, 95 percent of customers used to come to buy jewellery, while 5 percent came to buy bulk gold, but now the number of customers looking for bulk gold has reached 25 percent," Shakya said. There is no gold in the market, there is no condition to give.'

प्रकाशित : वैशाख ११, २०८१ ०८:२२
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