Kathmandu, May 6

The price of precious metals slumped significantly in the week of April 30 to May 5 on expectations of further US interest rate increases this year and receding political uncertainty in Europe.

Higher US interest rates are a negative for gold, which earns nothing and costs money to insure and store. In a note, Goldman Sachs has said near-term downside risks for gold included more US rate increases than the market is expecting and the US Fed starting to shrink its balance sheet on the back of possible US tax cuts and solid US and global economic growth.

A World Gold Council unveiled in the week showed central bank gold demand hit its lowest in nearly six years in the first quarter as Chinese buying dried up.

Meanwhile, ‘concerns over a victory by far-right candidate Marine Le Pen in the French presidential election, which drove gold lower last month, have faded considerably’, Reuters reported. Sunday’s vote is expected to elect centrist Emmanuel Macron, whom investors favour.

The price of precious metals in the domestic market is governed by their rates set in the international market.

Gold was traded at Rs 54,900 per tola when the market opened on Sunday. The price of the yellow metal went on a free fall throughout the week. It fell by Rs 200 a tola to Rs 54,700 per tola on Monday; was down Rs 300 a tola to Rs 54,400 per tola on Tuesday; dropped by Rs 100 a tola to Rs 54,300 per tola on Wednesday; slumped Rs 500 a tola to Rs 53,800 per tola on Thursday and fell by another Rs 300 a tola to Rs 53,500 per tola on Friday.

Over the course of six trading days of the week, bullion price tumbled by Rs 1,400 a tola or 2.55 per cent.

Similar was the fate of silver, which lost Rs 30 a tola or 3.9 per cent during the review period.

The price of white metal was set at Rs 770 per tola on Sunday. Akin to gold, silver price fell throughout the week. It fell by five rupees a tola each day for next three days, to Rs 765 per tola on Monday, Rs 760 a tola on Tuesday and Rs 755 per tola on Wednesday. The price of the white metal dropped by Rs 10 a tola to Rs 745 per tola on Thursday and dipped by another five rupees a tola on Friday to close the week at Rs 740 per tola.