Gold prices continued to soar, reaching an all-time high of Rs106,300 per tola on Tuesday in the domestic market.

According to reports, in the international market, spot gold surged to $1,936.32 per ounce Tuesday.

The bullion has gained nearly $120 since the beginning of 2023, backed by expectations that the US Federal Reserve might increase rates by only 25 basis points at each of its first two meetings this year, after slowing its pace to 50 basis points in December 2022.

Gold prices are expected to rise towards record highs above $2,000 an ounce this year, albeit with a little turbulence, as the United States slows the pace of rate hikes and eventually stops increasing them, according to the reports.

On March 9, 2022, the price of a tola of gold (11.66 grams) set a record Rs103,500 in the domestic bullion market.

The yellow metal was hovering at Rs75,000 per tola before the Covid-19 pandemic started in Nepal.

“The strength of the US dollar increased the price of gold,” said Manik Ratna Shakya, president of the Federation of Nepal Gold and Silver Dealers’ Association. “As the domestic price gets impacted with the fluctuation in international price, it is difficult to predict whether the price will go up or down.”

Shakya said that despite the wedding season, the demand for gold is not high and the price factor is the key reason. The price of yellow metal has been continuously increasing over the past few weeks.

The slowdown in the economy has also reduced the purchasing capacity of people and that is not creating demand in the domestic bullion market, Shakya said.

There is a demand of 20 to 25 kg of gold daily, currently, Shakya said.

In Nepal, gold jewellery is a traditionally and culturally essential accoutrement during wedding celebrations when women put on their best ornaments. A middle-class Nepali family usually buys 5 to 6 tolas of gold when there's a wedding.

In April 2020, Nepal Rastra Bank slashed the daily gold import quota from 20 kg to 10 kg in a bid to stem the depletion of foreign currency reserves.

But responding to high demand, the central bank increased the quota back to 20 kg on April 3, 2021, while bullion traders urged it to raise the limit to 30 kg.

But on March 6, the central bank again slashed the daily import quota to 10 kg to stop the depleting foreign exchange reserve.

According to the Nepal Rastra Bank, gold imports jumped by 34.5 percent to Rs26.43 billion in the first five months of the current fiscal year ended in mid-December, from Rs19.65 billion in the same period last fiscal year.