KATHAMNDU: Investing in gold is a key way to guard against inflation. According to experts, gold remains a safe haven as the US dollar and other currencies seem unstable in the current economic climate. Gold is likely to remain popular among investors due to prevailing problems in the global economy.

“People here are making investment in gold,” said Tej Ratna Shakya, president of Nepal Gold and Silver Dealers’ Association (NEGOSIDA). He said, “Now people are much more interested in buying solid gold rather than gold jewellery.” During 2062 BS, the solid gold purchase was only about 5 per cent but it has now increased to 25 per cent, said Shakya adding that other investment sectors are not doing so well and people feel investment in gold is a better move.

Talking about the present gold market scenario, Shakya said, “Generally, people assume if the dollar gets strong, price of gold decreases and vice versa. However, now we need to keep a close watch.

“Even rise in gold price in the international market and fall in value of the dollar does not affect gold price in the domestic market,” Shakya said. If the value of Indian currency compared to the dollar is weak, this directly affects the rate of gold in the domestic market, leading to increased cost of gold.

Gold trading during the month of Jestha was 7 kg per day which was 10 kg per day during Baisakh. “We are quite hopeful of better trading this month,” said Shakya. According to him, in the total gold trade each month there is a 25 per cent trade of solid gold compared to gold jewellery.

According to figures published by World Gold Council (WGC) in its first Quarter (Q1) of 2009, gold demand trends report identifiable investment demand for gold, which includes exchange trend funds, bars and coins as the major source of growth in the quarter reaching 596 tonnes up to 248 per cent on Q1, 2008. Fears of future inflation in the ongoing financial uncertainty saw investors continue to invest in gold in the first quarter of 2009, buttressing its proven wealth preservation qualities. Total demand for gold in Q1, 2009 rose 38 per cent year-on-year to 1016 tonnes, representing a 36 per cent rise in value terms to $29.7 billion.

For years, gold has been valued as a global currency, a commodity, an investment and simply an object of beauty.