Gold dips as festive demand slackens

Gold dropped to a low of Rs 52,300 per tola on Tuesday with Teej demand wearing off and world prices entering a slump, said traders.

According to the Federation of Nepal Gold and Silver Dealers’ Association (Fenegosida), hallmark gold lost Rs 500 per tola (11.66 gm) in the domestic market.

Similarly, silver prices fell Rs 5 to Rs 785 per tola. The last time prices had sunk so low was on June 13 when the yellow metal reached Rs 52,000 per tola.

Traders said that gold had been going downhill mainly due to a stronger dollar. A robust dollar swept to a 14-month high on Tuesday as investors tweaked bets on an early hike in US interest rates, burdening oil, gold and stocks in the energy majors, Reuters reported.

“The dollar has been getting stronger against many currencies which made gold less attractive for investors,” said Tej Ratna Shakya, special member of Fenegosida.

Spot gold had slipped slightly to $ 1,254.66 an ounce by 0335 GMT. The metal closed down 1 percent on Monday, after earlier hitting $ 1,251.24—its lowest since June.

Quoting traders, Reuters reported that the path of least resistance for gold was to move lower as the US dollar is expected to strengthen further.

Shakya said that with the Nepali rupee rising against the greenback, prices fell in the domestic market. “Falling demand from jewellers and retailers across the country with the end of the Hindu women’s festival of Teej also contributed to the drop,” he added.

Right after the end of Teej last week, gold prices started to slip in the domestic market while a fall in prices in the international market also hastened the slump.

“As many Hindu women buy gold jewellery for the Teej festival, demand from jewellery makers jumped around 25 percent till August-end. There is less demand in the domestic market these days,” said Shakya who is also the proprietor of Tejwin Jewellery on New Road.

Prices had risen in the international market after tensions between Russia and Ukraine prompted investors to shift from stocks to gold.

According to Fenegosida, the country’s daily requirement of gold hovers around 20 kg in normal times and jumps to 35-40 kg during festive seasons.

Source: eKantipur