Despite a fall in the prices of gold in the international market, customers in Nepal have failed to entertain it owing to the quantitative restriction imposed by the government on the import of gold.
Though the price of the precious metal in the international price dropped by US$ 10 per ounce on Sunday, it did not affect the Nepalese bullion market due to a short supply.
“The short supply of gold in comparison to its demand was responsible for the irresponsiveness of domestic market to international market,” Tej Ratna Shakya, President of Nepal Gold and Silver Dealers’ Association (NEGOSIDA), told The Rising Nepal on Sunday evening.
Shakya said that since there was a very little quantity of gold in the domestic market with limited traders, gold was sold for higher prices even after the reduction of its prices in the international market.
As per the international price fall, there should be a reduction of gold price in the domestic market by around Rs. 1,000 per tola on Sunday, but the price only decreased by Rs. 100, he added.
As gold was available with a handful of traders, there was no competitive situation in the bullion market. So, consumers could not reap benefits, he said.
On Sunday, gold was traded at Rs. 54,000 per tola on Sunday, while it was sold for Rs. 54,100 on last Friday.
Whereas, the international price of gold dropped to US $ 1723 per ounce on Sunday from US $ 1,733.
Unless the government removes the quantitative restriction on gold, customers will continue to be forced to pay higher prices here as compared to the international market price, he said.
The present supply of the gold in the country is around 15 kg per day. According to the traders, daily demand for the precious metal is about 40 kg a day.
The government should increase the quota of gold import in order to address the local demand and check gold smuggling from India.
The governments will lose a lot of revenue if gold is smuggled to meet the domestic demand, he said.
The government imposed the quantitative restriction on the import of citing the negative balance of payments that lasted for almost two years due to high gold import volume.
Nepal had imported gold worth Rs. 41.63 billion during the fiscal year 2009-10. The volume came down to Rs 11.35 billion in the last fiscal year after the imposition of the measures. (Source: TRN)