Kathmandu, July 8

The price of precious metals fell in the week between July 2 and 7 as demand in two of the biggest consumers of gold — China and India — lost steam.

While consumers in India held off after advancing purchases ahead of a new tax policy effective this month, fresh buys in China too remained sluggish despite a slide in global spot prices.

An increase in taxes on gold sales in India from 1.2 per cent to three per cent could curb short-term demand from the world’s number two consumer of the metal, World Gold Council (WGC) said in the week. Faltering appetite in a country where gold is used in everything from investment to wedding gifts could further drag global prices.

WGC also said a move to ban cash transactions of over INR 200,000 from April 1 could hurt gold demand in rural areas where farmers often purchase gold using cash due to limited access to cheques and electronic payment systems. Two-thirds of India’s gold demand comes from rural areas, where jewellery is a traditional store of wealth.

The transactions rule’s potential impact isn’t entirely clear. “It could curb gold purchases; it could encourage gold shoppers to buy smaller amounts of gold spread over more transactions; or it could push a large part of demand underground and encourage a black market in gold,” Reuters reported.

In domestic market, Federation of Nepal Gold and Silver Dealers’ Association (FeNeGoSiDA) had set rate for gold at Rs 54,100 per tola on Sunday, first day of the trading week. The price of the precious yellow metal fell by Rs 100 a tola to Rs 54,000 per tola on Monday before tumbling by Rs 500 a tola to Rs 53,500 per tola on Tuesday. On Wednesday, bullion price edged up by Rs 100 a tola to Rs 53,600 per tola and its price remained the same the next day. However, on Friday, it reversed the previous gain to dip by Rs 100 a tola to close the week at Rs 53,500 per tola — Rs 600 a tola down from its price on first trading day of the week.

Meanwhile, FeNeGoSiDA had set the price of silver at Rs 745 per tola on Sunday and its price remained unchanged the next day. On Tuesday, the price of the white metal fell by Rs 15 a tola to Rs 730 per tola. Its price was unaltered for the remainder of the week.