Banks are left with around 750kg of unsold gold in stock after traders are reluctant to purchase the precious yellow metal, citing the fall in market demand amid soaring prices, according to Nepal Bankers’ Association.

On Friday, gold traded at Rs65,500 per tola—on par with an all-time high price first recorded on June 25.

The bullion market had opened with the price of Rs64,500 per tola last Sunday, and closed at Rs65,500 per tola on Friday—up by Rs1,000 a tola in a week.

Anil Sharma, executive director of the association, said the banks were forced to stop importing gold as bullion traders stopped buying gold. “Over the past month gold has hit a record high price,” he said.

Nepal Rastra Bank has allowed 24 banks to import 20kg of gold on a daily basis to sell in the domestic market. The central bank allows the banks to import up to 25kg of gold when its demand soars during the festive and wedding seasons.

Nepal imports gold from Dubai and Switzerland.

The bullion traders said the increasing price has created a reverse trend in bullion market as buyers are selling more gold than bullion traders. “With the successive price increases, bullion market in Kathmandu Valley is flooded with sellers, with almost no buyers,” said Tej Ratna Shakya, former president of the Federation of Nepal Gold and Silver Dealers’ Association.

Shakya said that traders were not buying raw gold from banks as they have already gold in stock sold by the buyers. “Surprisingly, the rush to sell gold by individuals increased even during the wedding season that lasted until Tuesday,” he said.

In the domestic market, the gold price has surged after it was announced during the budget presentation on May 29 to raise the import duty on the yellow metal by Rs800 per 10 grams.

According to Shakya, the demand for gold started to decline after the price crossed Rs60,000 per tola. “Traders across the country have been struggling to sell even 10kg of gold a day,” said Shakya, adding that the gold price has been escalating mainly due to the rising price in the international market.

Gold is considered a safe-haven asset by many investors. The news of escalating political tensions drives investors towards gold as a safe haven, reports the international media.

According to Reuters, the interest rates and dollar environment, uncertainties over the US-China trade war and now the geopolitical situation have created a very supportive environment for gold. Referring to the analysts’ anticipation, Reuters has reported that the price may go up to $1,500 per ounce by 2019 end.

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