Six Reasons Behind the One-Day Surge of Rs 20,000 per Tola in Gold Price

The price of gold in the domestic market has surged sharply, increasing by Rs 20,000 per tola in a single day. According to the Federation of Nepal Gold and Silver Dealers’ Associations (FNGSDA), gold that was traded at Rs 318,800 per tola on Wednesday has been fixed at Rs 339,300 per tola for Thursday.

The federation determines gold prices daily based on international market rates and Nepal’s import and customs costs. Gold prices had already risen by Rs 9,500 per tola on Wednesday. Since the beginning of Magh, gold prices have increased by Rs 61,000 per tola within just 15 days. On Poush 30, gold was priced at Rs 278,000 per tola in the local market.

Why did gold prices jump so sharply in a single day? To understand this, we spoke with Dharma Sundar Bajracharya, First Vice President of the Federation. He said such a rise is not driven by local factors unless customs duties change, and the current surge is entirely due to developments in the international market.

Bajracharya explained that the overall reason behind the continuous rise in gold prices is the weakening of the US dollar compared to other global currencies. He identified six major international factors responsible for the dollar’s decline and the resulting surge in gold prices.

The Six Key Reasons

1. War and geopolitical tensions
Reports of the United States deploying fighter jets for a possible attack on Iran have raised fears of war spreading across the Gulf region, including Qatar, Saudi Arabia, and the UAE, pushing investors toward safe assets like gold.

2. Fear of global conflict and instability
Concerns that China and Russia could side with Iran have fueled fears of a broader global conflict, creating instability in international markets and increasing demand for gold as a safe haven.

3. New trade agreements
Recent trade engagements, including visits by Canadian and British prime ministers to China and trade negotiations between the European Union and India, have altered global economic power dynamics.

4. Depreciation of the US dollar
Shifting international alliances and trade disputes, such as the US announcing tariffs on Canada, have weakened the dollar and reduced global dependence on it.

5. Central banks increasing gold reserves
Many central banks are selling dollars and purchasing gold. The Reserve Bank of India has significantly increased its gold holdings, while China reportedly acquired around 1,400 tonnes of gold in a short period.

6. Search for alternatives to the dollar
China’s strategy to strengthen the yuan and promote alternative currencies through blocs like BRICS has encouraged countries to move away from the dollar, increasing investment in gold.