Gold rate extended gains on Monday reaching a fresh record high in the local market.

The price of the precious yellow metal reached Rs117,400 per tola (11.66gm) on Monday on the weaker US dollar.

“The gold price has been increasing in the local market due to the appreciation of the US dollar,” said Manik Ratna Shakya, president of the Federation of Nepal Gold and Silver Dealers’ Association.

According to Shakya, in Nepal, the depreciation of the US dollar in the global market and the appreciation of the US dollar in the local market both play roles.

The Nepali rupee plunged to an all-time low of Rs133.70 against the dollar on Monday. Nepal Rastra Bank has fixed Rs133.70 per $1 for Tuesday’s trading.

International gold prices hit a more than six-month high on Monday, firming above the $2,000 per ounce level, as a weaker dollar and expectations of an end to US interest rate hikes lifted demand, according to Reuters. Spot gold was up 0.5 percent at $2,012.33 per ounce.

The yellow metal price increased by Rs1,400 per tola within a month ago.

On October 27, the price of the yellow metal had reached a new record high of Rs116,000 per tola.

In the last 12 months, the price has increased by Rs19,600 per tola.

Last Friday, it closed at Rs116,300 per tola in the local bullion market.

On Sunday, gold gained Rs600 on a tola to open at Rs116,900 per tola.

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

From the start of this fiscal year, in mid-July, the government imposed a 15 percent customs duty on gold in a bid to stem imports.

Previously, customs duty was a flat Rs8,500 per 10 grams.

The federation sets the daily gold price in line with international market prices which are the primary determinants.

The record-high price of precious yellow metal during the major wedding season has become a headache for both wedding planners and gold traders alike.

“Obviously, as the price goes up, people’s expenses will increase accordingly. The gold price has increased at the peak time of wedding season,” said Shakya. He said that the price may rise further due to the uncertainty prevailing in the country.

Gold is commonly considered to be a safe haven in times of financial or political uncertainty since it is not at risk of becoming worthless, unlike currencies or other assets bearing credit risk.

In Nepal too, gold has now become a safe haven for investors, insiders say.

Bullion traders said that they were expecting gold sales of Rs30-35 kilos daily in the mid-November to mid-December period—the key wedding season.

The daily demand for gold in Nepal reaches more than 50 kg during the major wedding seasons, especially in February, April and November. But since the price crossed Rs100,000 per tola, wedding sales have declined, bullion traders 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 typically buys five to six tolas of gold when there's a wedding.

In many Nepali communities, the groom’s family provides a set of gold jewellery to the bride that now costs millions. The engagement is also sealed with a gift of gold ornaments.

“The increase in gold price will also hit the sales of gold in the wedding season as traders were expecting a good volume of transactions,” Shakya said.

The rising price of gold is surpassing the buying capacity of Nepalis amid the economic slowdown, Shakya said.

Observing the international market trend, the gold price is expected to be Rs150,000 per tola in 2024, domestic bullion traders said.

It will become difficult to do gold transactions if the price continues to break records and continues its upward trajectory, according to Shakya.

According to the Department of Customs, Nepal imported gold of Rs11.56 billion in the first four months of the current fiscal year ended in mid-November.