Gold could reach “Rs 200,000 per tola” by mid-2025

Nepalese gold traders predicted a further upward trend as the price of the precious metal rose to a new high of Rs 167,400 per tola in the local bullion market on Sunday.

Manik Ratna Shakya, former president of the Federation of Nepal Gold and Silver Dealers Association, said that according to estimates, the gold price may cross the Rs 200,000 mark by mid-2025 due to various external factors such as geopolitical tensions and the US situation.

International media reports say that Iran’s attack on Israel may have an impact on gold.

Investors often seek security during a crisis, directing their funds towards assets such as gold. An Iranian attack could spark fear of regional conflicts, prompting investors to put their money into gold markets. Such an increase could result in an increase in gold prices.

“Gold remains the safest asset in the world today,” he said. “The impact of the geopolitical tension scenario increases investor appetite for gold.”

The purchase of precious metals reflects growing interest in alternatives to the dollar-based financial system.

Over the past 12 months, the price of an ounce of gold on the international market has increased from $1,947 to $2,746, an increase of 41 percent.

In Nepal, the gold price increased by Rs 50,400 per tola, an increase of over 43 percent year-on-year.

The price of the yellow metal has more than doubled in the last five years. Before the Covid-19 pandemic broke out in Nepal, the price per tola was 75,000 rupees.

Shakya said that an interesting thing that is happening in the world is that central banks, in addition to investors, are now buying gold.

According to A Financial Times. the analysis shows that consistent foreign central bank purchases have been an important factor in gold’s strength.

According to the analyst, such purchases do not appear to be solely related to the desire of many people to gradually diversify their reserve holdings to avoid significant dollar dominance, despite America’s “economic exceptionalism”.

There is also interest in finding alternatives to the dollar payment system, which has been at the core of international architecture for some 80 years.”

Global media analysis shows that economic and geopolitical uncertainty is a positive factor influencing gold prices due to its safe-haven status and ability to remain a reliable store of value. Its low correlation with other asset classes means it can act as insurance during market declines and geopolitical tensions.

The cases in Nepal are different.

According to Shakya, investing in gold is not allowed in Nepal, although it can be used for decades as collateral when borrowing money from banks. Traditionally, people keep gold ornaments and jewelry as collateral with a local lender to borrow money.

“As a result, while sales are increasing around the world, where it is allowed as an investment, sales have reached a nadir in Nepal,” Shakya said. “That means when gold prices go up, people don’t buy it.”

“If allowed to be used for investment purposes, it would play an important role in the economy and tax collection by the government,” he said, adding that bullion trading associations have repeatedly asked the government to allow gold as an investment vehicle.

People are not allowed to buy raw gold. The central bank only allows commercial banks to import up to 20 kg of gold per day, and gold dealers can buy one kilogram of gold from banks at a time.

India regulates the holding of gold. There is no upper limit for owning physical gold (such as jewelry, coins, bars, etc.), but the Income Tax Act sets certain limits.

The guidelines of the Income Tax Department specify the permissible limits of gold ownership for individuals depending on their marital status. A married woman can have up to 500 grams of gold, while for unmarried women the limit is 250 grams. For men, the threshold is 100 grams.

In Nepal, there are no regulations regarding the possession of gold and taxation of a metal deeply rooted in the country’s culture and traditions.

Shakya confirmed that there is no restriction on anyone owning gold in Nepal.

Festivals also put more money in people’s pockets because employees get bonuses and tend to spend money on luxury items.

Tihar, one of the busiest times of the year for gold sales, is underway, but high prices may discourage buyers during the festival as well, Shakya said.

Nepalis buy gold especially on two occasions – weddings and festivals like Teej, Dashain and Tihar. Indians believe that investing in gold on festive occasions brings good luck.

In an attempt to stop imports, the government has started charging 15% duty on gold imports based on the current fiscal year’s purchase bill.

Earlier, the customs duty was Rs 8,500 per 10 grams.

On September 27 last year, the central bank doubled the import quota to 20 kg per day in response to trader demand.

According to the Department of Customs, Nepal imported gold worth Rs 51.53 billion in the last fiscal year. The import value of the yellow metal in fiscal year 2021-22 was Rs 63.19 billion.