Kathmandu, July 16:

Gold price touched a historic high of 21,820 per 10 gram — Rs 25,450 per tola (11.664 gram) — in the domestic market today. If the current bullish trend continues, soon the price will touch Rs 30,000 per tola in the domestic market, according to gold traders.

Due to the weak dollar and plunge in global stock market, gold became a hedge against inflation pushing its price sky high. “The weak currency has also made gold more attractive because the metal is a hedge against inflation,” Tej Ratna Shakya, president of Nepal Gold and Silver Dealers’ Association (NEGOSIDA) said adding that the international price rise might propel the domestic market, too. “Though, there is no demand in the domestic market, the rallying seems to continue,” he added.

Earlier — on March 17 — gold had touched a historic high of Rs 25,000 per tola in the domestic market.

Gold Demand Trends (GDT), the World Gold Council’s flagship report on supply and demand trends in the global gold market, states that the sharp rise and unusually high volition in gold price, which briefly touched a record above $1,000 per ounce in mid-March, was a key determinant of movements in gold demand in the first quarter (Q1) of 2008. “It resulted in total identifiable demand falling by 16 per cent in tonnage terms from year-earlier levels to 701.3 tonnes (the lowest in five years) but rising 20 per cent in value terms to $20.9 billion, more than double the level of four years earlier,” it states.

Demand in India decreased but demand in China grew by 15 per cent to 101.7 tonnes in Q1 of 2008. Gold’s extensive appeal and functionality, including its characteristics as an investment vehicle, are underpinned by the supply and demand dynamics of the gold market.

For thousands of years, gold has been valued as a global currency, a commodity, an investment and simply an object of beauty. As financial markets developed rapidly during the 1980s and 1990s, gold receded to the background and many investors lost touch with this asset of last resort. Recent years have seen a striking increase in investor-interest in gold. While a sustained price rally, underpinned by the fact that demand consistently outstrips supply, is clearly a positive factor in this resurgence there are many reasons why people and institutions around the world are once again investing in gold.

In the international market also, gold posted $975 per ounce today.