KATHMANDU, APR 17, 2013
Gold plunged to 20-month low in the domestic market today, triggering a shopping frenzy, as buyers rushed to jewellery stores to make good use of unprecedented depreciation of the yellow metal.
Gold price dropped by Rs 3,000 today, on second consecutive day after it had the biggest drop in a day of Rs 3,300 yesterday, to Rs 49,500 a tola (11.664 grams), with the yellow metal pegged at $1,360 per troy ounce in the international market.
“Yesterday customers were less excited about the drop in price but depreciation of gold on the second consecutive day has sharply increased the demand,” said Manik Ratna Shakya, General Secretary of Nepal Gold and Silver Dealers Federation. The gold price started falling yesterday after the international bullion market witnessed panic selling by gold hoarders, pulling the price down to $1,460.
“Buyers are lapping up the downfall trend, considering it the best time to buy jewellery for wedding season,” Shakya said, hinting that the supply constraint of 14 kg per day will come into play any time soon. As the global gold price retreated to a two-year low, price in the domestic market plunged to its August 2011 level. The yellow metal price has come down by almost 20 per cent from the highest ever recorded price of Rs 61,848 per tola back in November 2012.
The proposal that Cyprus sell some of its gold reserves to pay off debts in accordance with suggestions from the European Central Bank and International Monetary Fund triggered the current bout of plunge. Reports suggest that large sell-orders placed by big investment banks spooked the markets and led to current decline.
Cyprus selling its gold reserves reflected larger monetisation of gold reserves across other European central banks that are going through debt troubles. In addition, the US Federal Reserve is expected to conclude its bonds buying drive to keep interest rates at near-zero level soon following some positive signs of recovery in the economy. If the Federal Reserve allows interest rates to rise, that will counter inflation concerns, and gold will lose its sheen as a safe-haven investment.
Last week, Goldman Sachs — one of the largest investment banks in the world — suggested its clients to take short position in gold, implying ‘sell gold at current price then buy it when the price plunges’. The bank had noted last week that the decline in gold could be faster than analysts had initially expected. It has been urging its clients to sell gold since December 2012.
Source: THT
Gold plunged to 20-month low in the domestic market today, triggering a shopping frenzy, as buyers rushed to jewellery stores to make good use of unprecedented depreciation of the yellow metal.
Gold price dropped by Rs 3,000 today, on second consecutive day after it had the biggest drop in a day of Rs 3,300 yesterday, to Rs 49,500 a tola (11.664 grams), with the yellow metal pegged at $1,360 per troy ounce in the international market.
“Yesterday customers were less excited about the drop in price but depreciation of gold on the second consecutive day has sharply increased the demand,” said Manik Ratna Shakya, General Secretary of Nepal Gold and Silver Dealers Federation. The gold price started falling yesterday after the international bullion market witnessed panic selling by gold hoarders, pulling the price down to $1,460.
“Buyers are lapping up the downfall trend, considering it the best time to buy jewellery for wedding season,” Shakya said, hinting that the supply constraint of 14 kg per day will come into play any time soon. As the global gold price retreated to a two-year low, price in the domestic market plunged to its August 2011 level. The yellow metal price has come down by almost 20 per cent from the highest ever recorded price of Rs 61,848 per tola back in November 2012.
The proposal that Cyprus sell some of its gold reserves to pay off debts in accordance with suggestions from the European Central Bank and International Monetary Fund triggered the current bout of plunge. Reports suggest that large sell-orders placed by big investment banks spooked the markets and led to current decline.
Cyprus selling its gold reserves reflected larger monetisation of gold reserves across other European central banks that are going through debt troubles. In addition, the US Federal Reserve is expected to conclude its bonds buying drive to keep interest rates at near-zero level soon following some positive signs of recovery in the economy. If the Federal Reserve allows interest rates to rise, that will counter inflation concerns, and gold will lose its sheen as a safe-haven investment.
Last week, Goldman Sachs — one of the largest investment banks in the world — suggested its clients to take short position in gold, implying ‘sell gold at current price then buy it when the price plunges’. The bank had noted last week that the decline in gold could be faster than analysts had initially expected. It has been urging its clients to sell gold since December 2012.
Source: THT
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