The Nepali market is currently experiencing a continuous decline in gold and silver prices. Nepali consumers had anticipated gold prices to reach up to Rs 200,000 per tola (11.664 grams). Now, these same consumers are in a ‘wait and watch’ mode, expecting prices to fall further before making purchases. Business activity has slowed, and despite the onset of the wedding season, consumers are hesitant to buy gold.
The fluctuation in gold and silver prices can be attributed to various factors. International market trends directly impact the Nepali market. Currently, the strength of the US economy and the appreciation of the US dollar have contributed to falling gold prices. Donald Trump’s return as US president has already influenced economic sentiment.
The US Federal Reserve maintains high interest rates, causing investors to focus on safe-haven assets such as US dollars or government bonds. This has reduced the demand for gold.
Policies and gold demand in neighboring India also influence Nepal’s precious metal market. Nepal’s gold and silver prices are closely tied to Indian market trends. Reduced gold demand in India directly affects the Nepali market. India’s recent reduction in gold import taxes may have contributed to the price decline.
Geopolitical factors also play a role in the precious metals price decline. Global political developments, Middle East instability, and the Ukraine-Russia conflict are significant factors. Recent events may have reduced the perception of gold as a ‘safe investment’. If current conditions persist, gold prices in the Nepali market could reach between Rs. 155,000 to 150,000 per tola by mid-January.
Higher gold and silver prices have also dampened Nepali consumer demand. Gold demand has decreased following the conclusion of festival seasons like Dashain, Tihar and Chhath. When demand falls, prices tend to decrease even with a stable supply.
As told to Ramesh Dawadi of Himal Press.
(Lakandri is the Treasurer of the Federation of Nepali Gold and Silver Dealers Association)
