Gold prices reached an all-time high of Rs113,600 per tola in the domestic market on Thursday.

The price of precious yellow metal, which was traded at Rs 12,500 per tola on Wednesday, gained Rs1,100 on a tola in a single day on Thursday.

“The gold prices in Nepal have been increasing mainly due to the rise in the customs duty,” said Manik Ratna Shakya, president of the Federation of Nepal Gold and Silver Dealers’ Association.

The government through the budget, on May 29, had raised the customs duty on gold by 15 percent.

Friday’s rise, however, is due to international factors.

According to reports, spot gold surged to $1,980.59 per ounce on Thursday in the international market. Gold prices advanced to their highest in about two months on Thursday, driven by the US dollar’s weakness and growing expectations that the Federal Reserve would conclude its aggressive rate-hiking cycle at its meeting next week.

“Observing the current international market situation, the gold price is expected to rise further as there are possibilities for a rise in dollar rates,” said Shakya.

Gold prices are expected to rise towards record highs above $2,000 an ounce this year, albeit with a bit of turbulence, with the US expected to slow the rate hikes and eventually stop increasing them, according to reports.

In Nepal, the price of the yellow metal was hovering near Rs75,000 per tola before the Covid-19 pandemic started in Nepal.

In the last three years, gold has become costlier by over Rs38,000 per tola.

The price of gold depends on international factors. Apart from global prices, which are denominated in dollars, import duties and other taxes also play a role in determining gold rates in Nepal.

With the rise in the gold prices, the sales have reduced to around eight kilos daily, while customers coming to sell their gold has been rising, bullion traders said. As it has been difficult to manage finances due to the inflationary pressures, people are selling their gold, they added.

“We are selling 30 to 40 percent of the gold that we purchased from the customer,” said Shakya.

“As the sales have declined with an increasing trend of customers selling their gold, we are not buying any fresh gold.”