Stronger dollar weighs on gold, silver prices
Kathmandu, July 21
The price of precious metals fell week-on-week for the second consecutive week in the period between July 15 and 20 due
to strengthening of the dollar and drop in oil prices.
According to the foreign exchange rate of Nepal Rastra Bank, Nepali rupee vis-à-vis the greenback depreciated to an all-time low on July 20 (Friday) to stand at 110.78. The dollar has strengthened as Fed Chairman Jerome Powell did nothing in the week to counter expectations of two more rate rises this year and said the United States was poised for several more years of growth.
The stronger dollar makes gold more expensive for buyers with other currencies. Higher interest rates are also a threat to gold because they tend to boost the dollar and raise the opportunity cost of holding non-yielding bullion.
As per the weekly statement issued by the Federation of Nepal Gold and Silver Dealers’ Association (FeNeGoSiDA), gold was traded in the local market at Rs 57,000 per tola on Sunday. Its price went up by Rs 100 a tola to Rs 57,100 per tola on Monday, but dipped by the same amount on Tuesday to be traded at Rs 57,000 a tola. On Wednesday, however, bullion price dropped by Rs 500 per tola to be traded at Rs 56,500 a tola. The price of yellow metal was stable for remainder of the week.
Meanwhile, silver was traded at Rs 750 per tola when the market opened on Sunday and its price was unchanged for the next two days. On Wednesday, the price of the grey metal dipped by five rupees a tola to Rs 745 per tola. It remained stable on Thursday before dropping by five rupees a tola again on Friday to close the week at Rs 740 per tola.
Reuters reported that a drop in prices spurred some interest for physical gold in major Asian hubs this week, but failed to stoke significant demand in India as buyers awaited bigger dips.
Global prices have fallen sharply, but in the local market, the correction was modest due to a drop in the Indian rupee to a record low, a Mumbai-based dealer with a private bank told the news agency.
Demand has not been quite so aggressive in China with the renminbi’s depreciation, Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong, said.
Weakness in the yuan, as a result of an ongoing trade dispute between the United States and China and a slowing economy, has weighed on demand for commodities.
Meanwhile, demand for gold is expected to rise during the second half of 2018, as inflation potentially rises and a global trade war may impact currencies, the World Gold Council said on Thursday.