Gold touched a new high of Rs 41,504 per tola (11.664 grams) in the domestic market on Wednesday. Silver, too, climbed to a new high of Rs 1,240 per tola on the day.
Gold dealers have attributed the rise in the price of precious metals to the fear of political and economic crisis in some African and Middle East countries, weakening US dollar and high crude prices in the international market.
“The main reason behind continuous rise in bullion prices is the political uncertainty in Libya,” said Tej Ratna Shakya, president of Nepal Gold and Silver Dealers´ Association.
Gold was traded at a new high of $1499.32 per troy ounce in the international market on the day. Silver too climbed to a 31-year high of $44.26 per troy ounce.
The price of silver is increasing also because of growing industrial demand throughout the world in the aftermath of massive earthquake and tsunami in Japan. Industrial demand is also high in Japan as industries there are currently in reconstruction phase.
“Our business volume has dropped by more than 50 percent due to upward spiral in the price of gold and silver,” Shakya said.
According to the association, daily demand of gold has dropped to 25-30 kg from 40-45 kg recorded on normal days. Similarly, the demand for silver has dropped to less than 20 kg a day.
“Traders are hopeful of demand growing up during the upcoming wedding season. But they fear high prices may dent their hopes of getting good business,” Shakya said.
Sales of gold and silver normally goes up during the wedding season. Traders expect the daily demand to climb to as high as 40-50 kg a day during wedding season.
Price of gold has increased by 25 percent as compared to prices recorded last year. However, price of silver has more than doubled over the past year.
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