Upendra Poudel of Sitapaila in Kathmandu was forced to suddenly postpone his wedding planned for April to November amid the Covid-19 lockdown. A week before the lockdown that began on March 24, gold was trading at Rs 78,500 per tola. On Friday it hit a record high of Rs 99,300 per tola in the Nepali market.

The price of a tola of gold (11.66 grams) is nearing the per capita income of Nepalis of $1,085 (or Rs130,000 in Friday's exchange rate).

“There can be no wedding without a certain amount of gold,” said Prithvi Poudel, father of Upendra. “My budget to buy gold is not enough. The price keeps going up and shows no signs of abating.”

In Nepal, gold is traditionally and culturally important in performing marriage rituals. Nepalis buy gold according to their means for weddings. A middle class Nepali family usually buys five to six tolas of gold for a wedding. A tola is equivalent to 11.66 grams.

But no one knows what the price will be in November.

“Gold price continues to go up due to the uncertainty of the virus, as it is touted as a safe haven for global investors,” said Tej Ratna Shakya, former president of the Federation of Gold and Silver Dealers' Association. “The price rise in the global market is directly reflected in the domestic market.”

Investors around the world have poured their money into the precious metal as the fall in demand for oil and stock prices has made investors turn to gold.

International bullion analysts have predicted that the precious metal will soar to $2,000 per ounce (which would translate into Rs 98,743 per tola in the international market ) late this year or early next year.

The domestic market price would include the customs duty, the markup by sellers and labour cost in the case of jewellery. In the budget speech for the fiscal year 2020-21, Finance Minister Yubaraj Khatiwada raised the import duty on gold by Rs2,000 per 10 grams to Rs8,500.

Even before the pandemic began in January, the trade war between the United States and China had already started pushing gold prices upwards, as returns on investment were becoming uncertain, and gold is considered a safe haven.

That has affected Nepali families like the Poudels for whom gold is interwoven with culture and tradition.

“Adding the cost of making jewellery from gold, the price would now well cross the six-digit mark,” the senior Poudel told the Post. “It’s hard to believe.”

It is not just during weddings that Nepalis buy gold. During the festival of Teej, which falls in September, women tend to buy gold jewellery; during Dashain and Tihar in October and November, people spend money on gold for prosperity. After that is November when the wedding season begins.

But bullion traders are not optimistic about sales picking up.

“No one is buying gold,” said Shakya, one of the oldest gold dealers in the country.

According to him, since the opening of the lockdown on July 21, the transaction is almost zero. “Overall, this year, we have recorded sales of only 5 percent of what has been imported this year,” he said.

Banks were allowed to import 20 kgs of gold daily but a day before the lockdown started, the government reduced the quota to 10 kg daily as it saw the foreign reserves depleting. The gold dealers buy from the banks.

At this rate, the demand for gold will be a record low this year, according to Shakya.

“It is not only because of the rise in the price of gold but also because people’s incomes have gone down due to the pandemic,” he said. “We don’t know how long it will continue. Gold will not become a priority for the people as the economic crisis continues to unfold.”

Tens of thousands of Nepalis have lost their jobs or have had pay cuts after the country imposed a lockdown to curb the spread of the virus.

On the other hand, the rise in price is a boon to Nepalis who have bought gold as an investment.

Bidya Kuwar, a housewife from Budhanilkantha, said she had never expected that gold price would reach six-digit and she believes the price may rise more.

"It’s a big price and the right time to sell gold. But for me, gold is an asset. I will sell only when I face a financial crisis, " said 45-year-old Kunwar. "I can't afford to buy them again, if I sell it now.”

She is happy to keep gold as a safe haven asset.

Shakya corroborates this view.

“People are not coming to sell. They come and ask whether the price will rise further. People are also worried that once they sell it they will not afford to buy it again,” he said.

While traders may be losing out, the rise in gold price is good news for the central bank.

“The rise in price will reduce the demand in the domestic market and discourage the buyers unless there is a necessary occasion like a wedding. This eventually will reduce imports as gold has been categorised as a luxury item,” Gunakar Bhatta, spokesperson for the Nepal Rastra Bank, told the Post “This is a big relief, indeed. Around Rs30 billion that used to go outside the country annually for gold imports will be saved to some extent now as people will stop buying gold.”

According to him, since the lockdown, banks have not been buying gold.

Nepali banks have around 322 kg of gold in their stock, according to Nepal Bankers Association.

Furthermore, since Nepali investors have not opened a capital account in the international commodity market and invested in petroleum and gold as they are not allowed to do so, the rise in price will not impact the economy, Bhatta added.

The government may be happy with reduced imports of gold but for Upendra's father, gold is a necessity during a wedding.

“We don’t have an alternative,” he said. “We have to buy it no matter what the rate is.”