Bullion Traders had a Desolate Dashain Fest

Dashain could not being cheer to gold and silver traders as increasing prices and shortage of currency notes hit bullion transactions this Dashain.

"This Dashain, the market observed less than 10 kg transaction of gold on an average per day in comparison to last Dashain's 13 kg," said Tej Ratna Shakya, president of Nepal Gold and Silver Dealers' Association (NEGOSIDA).

The domestic bullion market saw the precious yellow metal being traded at Rs 29,300 per tola (11.66 gram) -- Rs 400 less than what it closed at on September 24 -- before the Dashain holiday started. "The weak dollar has pushed gold price high in the international market," Shakya said adding that the price in the international market yesterday was $1001 per ounce and which was $1010 on September 24 -- the last closing in the domestic market.

The domestic price is fixed according to the international market price. The international gold price is now hovering around $1,000.

The US keeps saying it has a `strong dollar policy', but few believe this now. Overall, the `official consensus' is that the dollar should descend another 20+ per cent, but this will hurt the recovery badly.

Consequently, the gold price is waiting for action on this front.

Since the dawn of trade in the human community, gold has been money and has always held an important place in the reserves of developed nations. According to experts, they are watching European signatories of the Central Bank Gold Agreement, which has been on the go since the turn of the century, slowing their gold sales to barely a trickle.

IMF has agreed to sell 403 tonnes and opened a way to sell either in the `open market', which will affect the gold market.

However, the demand has not come down. Traditional bullion demand itself is strong from China westwards to the UK. This demand and investment demand have proven to be the most remarkable and heavy form of new and old demand over the last three years and things look set to continue to grow and substantially, from now on perhaps. It needs clear evidence of economic or currency breakdown before it jumps rapidly though.