Gold sales soar on pent-up purchases for weddings

Gold sales soar on pent-up purchases for weddings

https://kathmandupost.com/money/2021/11/24/gold-sales-soar-on-pent-up-purchases-for-weddings

Shekhar Maharjan and Rajani Dangol had decided to tie the knot a year ago. But the second wave of Covid-19 forced them to put their plan on hold as Nepal plunged into a public health disaster with daily caseloads rising to 9,000.

Their parents agreed to organise the auspicious ceremony after the situation became normal.

The Maharjan and Dangol engagement ceremony was held before Dashain. The marriage date had been fixed for November 29.

The Maharjan family is now rushing to buy gold for the bridal jewellery. Like them, hundreds of Nepalis whose marriage plans either got cancelled or postponed are now busy making arrangements, mostly buying gold for jewellery.

Bullion and jewellery stores on New Road never looked so busy before with footfall running into the hundreds. Despite the end of Nepal’s biggest festivals, the markets are jammed with shoppers buying myriad materials for weddings and other ceremonies.

One of the key factors pulling crowds to New Road is its gold and jewellery shops.

“Demand for gold jewellery has increased significantly. It is more than double compared to the same period last year,” Manik Ratna Shakya, president of the Federation of Nepal Gold and Silver Dealers Association, told the Post. “Despite the rise in gold prices, demand has increased to unexpected levels. This shows normal days are back again,” he said.

“Sales have reached a new high,” said Tej Ratna Shakya, former president of the association. “The New Road market is packed with shoppers, mostly with people planning for weddings.” November is one of the auspicious wedding seasons.

Shoppers have been encouraged by the waning pandemic. Nepal on Tuesday reported 313 new coronavirus cases in the last 24 hours, taking the nationwide infection tally to 819,699.

For Maharjan’s family, the drop in Covid cases was a big relief. But they had to suffer high inflation post-pandemic.

“We had planned to buy around 8 tolas of gold, but as it has become very expensive, we decided to buy only half that amount,” said Maharjan, 34, who owns a mobile shop and a restaurant in Kathmandu.

“As gold prices are too high, we are cutting down on wedding expenses. We have invited fewer people for the wedding party,” Maharjan said.

In August 2020, gold prices in Nepal crossed the six-digit mark for the first time in the midst of a faltering global economy. The yellow metal was hovering at Rs75,000 per tola before the pandemic started. Nepal imposed a complete lockdown on March 24, 2020.

On Tuesday, gold was priced at Rs92,300 per tola. However, if the cost of making jewellery is added, it will cost consumers over Rs100,000 per tola.

Family of another bride Rajani Dangol recently purchased gold for the groom during the engagement ceremony. It cost them around Rs90,000 per tola.

Despite the country recording high inflation, people are buying gold, bullion traders said.

The daily demand for the precious metal had reached 40 kilogram during the Tihar festival which ended two weeks ago.

The demand for gold is still strong, said Shakya.

According to domestic bullion traders, the gold market started improving from Dashain, mainly due to the vaccination drive.

Bullion transactions were almost down to zero for nearly one and a half years with the country’s daily gold import quotas dropping from 20 kilos to 10 kilos, which had come as a big relief for the government as it kept the country’s foreign reserves intact.

The government allowed banks to import 20 kilo gold daily starting April 2021 which was later reduced to 10 kilos.

Shakya said that the import is not sufficient now to meet the demand. “People, on an average, are buying 10 tola gold.”

But, according to bullion traders, the demand is currently being met by the gold brought by people from abroad.

The Department of Customs has advised Nepalis returning from abroad not to bring gold bullion by declaring it as jewellery and warned of legal action against anyone violating the rules.

In a notice issued on November 17, the department said its attention was drawn to the rising trend of people bringing gold bullion from abroad declaring such gold as jewellery.

According to customs officials, the law allows people coming from abroad to bring up to 50 grams of gold jewellery without paying the customs. Gold and silver became among the country’s top import items during the first quarter of the current fiscal year.

The government warning comes amid a slump in foreign currency reserves caused by surging imports and falling remittances.

The country imported gold worth Rs11.27 billion in the first three months of the current fiscal year [from mid-August to mid-October], which was Rs737 million in the same period a year ago, according to the Trade and Export Promotion Center.

Nepal imports gold mainly from Dubai and Switzerland. It also comes from Turkey and Malaysia.

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