KATHMANDU, Feb 27: Gold is regarded as a safe-haven investment worldwide. But jewelry traders in the capital are not selling gold bars to investors citing shortfall in the supply of yellow metal.
According to Nepal Gold and Silver Dealers Association (Negosida), daily demand of gold in Nepal hovers 30 kg whereas supply stands at mere 15 kg.
“It is difficult for customers get gold bars because of the existing mismatch in demand-supply situation,” said Manik Ratna Shakya, proprietor of Gahana Kunja and member secretary of the ad hoc committee of Federation of Gold and Silver Dealers Associations.
Neogsida is in the process of transforming into a federation.
Dealers are reluctant to sell gold bars as they make more profit while selling jewelries. “We are not selling gold bars because we will face shortage of gold when wedding season begins after six weeks,” a jeweler told Republica preferring anonymity.
Demand for gold increases by about 50 percent during wedding seasons as gold jewelries are one of the must-have items for Nepali weddings.
Tej Ratna Shakya, former president of Negosida, said they have received complaints that some dealers are charging around Rs 2,000 per tola more that the rate fixed by the association for gold bars. “Unfortunately, we cannot take action against them. The government should strictly monitor the market and ensure smooth supply to control such ill practices,” he added.
Dealers said black marketing of yellow metal will not stop unless the government lifts the cap on supply of gold.
At present, Nepal Rastra Bank (NRB) allows designated commercial banks to supply only 15 kg of gold to the market.
“The demand-supply mismatch has not only spurred black-marketeering of gold but has also triggered smuggling of the yellow metal from China and India,” Tej Ratna said.
Price up Rs 500 per tola
Gold price went up by Rs 500 to Rs 56,800 per tola (11.663 grams) in the Nepali market on Wednesday.
According to Nepal Gold and Silver Dealers Association (Negosida), price rise in the domestic market is in line with the prices in the international market.
Gold price climbed to US$ 1,610 per troy ounce in the international bullion market on Wednesday morning, up from Tuesday´s closing of $1,590 per troy ounce.
Tej Ratna said gold became dearer in the domestic market due to price movement in international market. “Gold became dearer also because of weakening of Nepali rupee against the greenback,” he added.
Price of silver, however, remained unchanged at Rs 1,055 per tola.