Import ban pushes up gold price at home

KATHMANDU; Due to the ban on import of gold, the trading cost of gold in the home market has failed to keep pace with the international market price. According to Nepal Gold and Silver Dealers' Association (NEGOSIDA) president Tej Ratna Shakya, in line with the international price the trading price of gold here should have been at least Rs 500 less but as there is no import the market price is high. Gold today opened at Rs 27,950 per 10 gram and silver at Rs 428.50 per 10 gram while gold's international price was $1124.55 per ounce.

After a duty hike of IRS 300 per 10 gram by the Indian customs, Nepal Rastra Bank (NRB) stayed the hand carry system of gold import to avoid the flight of capital. "Though there is no gold import, there is no crisis in the market," said Shakya. He added that due to the off-season there is very little gold transaction -- less than 10 kilos per day. Hence, low demand has helped to keep the gold price steady here.

Before NRB banned import, a total of 700 kilos of were gold imported through hand carry system, but if it takes too long for the government to decide new customs duty on gold import it will create a gold shortage after mid-Mmarch. Shakya said most probably the customs duty will be raised to match India's in order to protect the economy and avoid dollar deficit. More than gold jewellery, people seem to be buying gold for holding purpose.

To provide relief to gold traders and keep the domestic market price abreast of the international gold price, NEGOSIDA is also trying to introduce a dual pricing system within a month.