The price of gold and silver in Nepal has been soaring high in the recent months, setting records after records. Gold is now selling above NPR 267,000 per tola, the largest in the country ever, and silver is also soaring.
It is not a coincidence that this trend increases. Rather, it is a display of powerful world and local economies dictating demand, currency and investor action.
Why Gold and Silver Prices Are Rising Fast
To begin with, the economic uncertainty is moving investors to safe-haven investments such as gold and silver worldwide. Whenever the markets shake or the currencies change, individuals purchase precious metals in order to save their wealth. As a result, the trends in the international prices are transferred to the Nepal market.
Second, Nepal is relying on the imports of gold and silver. Metals are more expensive in the country since these imports are in foreign currencies, and thus when the US dollar and Nepali rupee are weakened, the metals become expensive.
Meanwhile, local demand continues to increase. Gold is now considered to be more secure and more profitable by many Nepali investors compared to the bank savings, at least, due to low interest rates in the deposits. This is a combination that causes the prices to go up gradually.
How Nepali Investors Are Responding
As people lose trust in bank saving, physical assets have become popular among investors. Gold and silver have turned into a hedge against inflation, currency risk and market volatility.
Nevertheless, the increase in prices affects ordinary life as well. A lot of families postpone gold purchase during weddings and festivals and the middle-income families are the worst hit. The same situation occurs in the rural areas and gold has become unaffordable to a number of people.
Implications for Nepal’s Economy
Its increasing trend of the price of gold and silver over a long period demonstrates two important tendencies:
- There is still a lot of uncertainty within the economy, and this has pushed the people to precious metals.
- Conventional savings products do not have high returns which motivate investment in tangible assets.
Demand for gold and silver is expected to be high unless there is stabilization of the economy and also the banks are willing to pay higher returns. Precious metals remain a safe haven and a store of value to the Nepalis in such an environment.
Thus, the high price of gold and silver in Nepal (records) is not just a result of market changes. They are indicative of investor waryness and increasing cost of living and greater economic insecurity. To individuals and investors, it is important to know these trends so that they can make sound financial choices.
