Gold price slumps to over three-month lowGold price fell to over three-and-a-half-month low of Rs56,300 per tola (11.66 grams) on Thursday, as declining interest in the precious yellow metal in the international market drove its price down in the domestic market.
Gold price fell to over three-and-a-half-month low of Rs56,300 per tola (11.66 grams) on Thursday, as declining interest in the precious yellow metal in the international market drove its price down in the domestic market.
The last time gold was traded at this level was on June 13.
Gold price is fixed in Nepal based on international prices. So any fluctuation in the price of the yellow metal abroad affects Nepali market as well.
“Since international gold prices are likely to fall in the coming days, the yellow metal may cost even less once markets open after Dashain holidays,” said Tej Ratna Shakya, former president of the Federation of Nepal Gold and Silver Dealers Association, adding, “Also, the demand has not gone up in the domestic market even during Dashain festival.”
Gold price has lately been tumbling in the international market over worries that the US central bank may raise interest rates in December for the first time in 12 months. The probability of the US Federal Reserve raising the interest in December has risen to 62 percent, from 54 percent a week ago, futures data compiled by Bloomberg show.
Gold is highly sensitive to rising interest rates, which raise the risk of holding “non-yielding assets such as bullion while boosting the dollar, in which it is priced”.
International gold price (XAU/USD) slumped to $1,264.7 per troy ounce on Thursday after falling 3.3 percent on Tuesday, the biggest loss since December 2013. Gold prices are down about eight percent since July and are likely to fall further because of strong US jobs numbers, which will prompt the US central bank to tighten the monetary policy.
“A surprise on the upside (of US jobs numbers) will make market watchers expect an even higher probability of a rate hike and that could bring gold prices down,” Reuters quoted OCBC Bank analyst Barnabas Gan-who as per Bloomberg is the most accurate forecaster for the metal in the third quarter-as saying.
“I would advise to buy on dips for gold simply because the fall in gold prices is very much driven by very short-term factors,” Gan said, who has a year-end forecast of $1,350 an ounce.
The US will release non-farm payrolls report on Friday, which is expected to show 175,000 jobs added, according to the median estimate of 100 economists polled by Reuters.