The price of gold dropped by Rs15,900 per tola (11.664 grams) on Monday following the government’s decision to decrease the customs duty on the precious yellow metal.

According to the Federation of Nepal Gold and Silver Dealers Association, the price of hallmark gold has been set at Rs151,300 per tola for today, down from Rs167,200 on Sunday.

The government has slashed the customs duty on gold imports by 50 percent, from 20 percent to 10 percent. This decision was made during a Cabinet meeting on Thursday.

Through its budget, India reduced the customs duty on gold and silver from 15 percent to 6 percent. In contrast, Nepal had increased the gold customs duty by 5 percent, raising it to 20 percent in the current fiscal year’s budget. This made gold more expensive in Nepal and cheaper in India, leading to smuggling.

The Federation said the imbalance in customs duties due to the open border encouraged illegal trade. To prevent such trade, the Federation suggested that the customs duty be set at 8 percent.