Gold slid to its lowest in four months in the domestic market as the US dollar rose following moves by the US government to slash taxes for investors. The precious metal was traded at Rs54,500 per tola (11.66 gram) in the domestic market on Friday.

According to the Federation of Nepal Gold and Silver Dealers’ Association (Fenegosida), the price of 99.99 percent pure gold witnessed a single-day drop of Rs500 per tola to reach a four-month low. The yellow metal was traded at Rs54,400 per tola on August 8.

Similarly, the price of silver plunged to Rs710 per tola, recording a single-day fall of Rs20 per tola. Gold and silver have become cheaper by Rs860 per tola and Rs25.50 per tola respectively over the week.

Fenegosida President Mohan Kumar Sunar attributed the fall in gold prices to investors abandoning precious metals and putting their money in the US stock market with expectations of receiving maximum returns.

“A rising greenback and an increase in the interest rate by the Federal Reserve, the US central bank, also helped to push down demand for gold,” Sunar said.

On Thursday, spot gold dropped 1 percent to $1,251.11 an ounce, according to Reuters. “The metal was down for a third straight week, headed for its biggest weekly decline since early May.”

The price of gold has been going down despite rising demand in the domestic market. According to Fenegosida, demand has surged due to the ongoing wedding season.

“Although bullion transactions were affected to some extent by the election on Thursday, demand has remained on the high side due to the wedding season,” Sunar said.

Currently, traders have been selling 20 kg of gold daily, the quota fixed by Nepal Rastra Bank. “We have urged the central bank to raise the quota to 25 kg daily considering the sharp rise in demand,” he said, adding that the central bank had hinted it might increase the quota from next month.

According to the central bank’s statistics, gold imports jumped by a whopping 84.6 percent to Rs7.56 billion in the first three months of the current fiscal starting mid-July.

In the last fiscal year, the country imported gold worth Rs27.43 billion, up 70.70 percent year-on-year. Traders said the increase in gold imports was a result of government moves to curb smuggling.