The domestic gold market has witnessed a dramatic price drop following a government decision to reduce the customs duty on precious metals. The price of gold plummeted by a significant Rs 15,900 per tola in a single day, marking one of the steepest declines in recent times.
The sharp drop came after the Cabinet announced a reduction in the custom duty on gold from 20% to 10%. This is a reversal of the fiscal year 2080/81 decision, which had raised the duty from 15% to 20%.
As per the Nepal Federation of Gold and Silver Dealers’ Association, fine gold is now trading at Rs 151,300 per tola, a sharp decrease from the previous day’s rate of Rs 167,200 per tola.
Silver prices have also been affected by the duty reduction. Currently, silver is trading at Rs 1,845 per tola, down by Rs 115 from its previous rate of Rs 1,960 per tola. The government has likewise slashed the custom duty on silver, lowering it from 15% to 10%.
The decline in gold and silver prices is expected to boost consumer interest, particularly during the upcoming festive and wedding seasons in Nepal, when the demand for jewelry traditionally surges. Jewelers anticipate an increase in sales as reduced prices make gold and silver more affordable for consumers. This could also provide a much-needed boost to the domestic jewelry market, which has seen fluctuating demand in recent months.
However, concerns remain over the long-term impact of the duty reduction on government revenue. With lower duties, the government may face a shortfall in tax collection from gold and silver imports, which have historically been significant contributors to the national budget. Policymakers will need to balance the benefits of increased consumer spending with the potential loss in revenue.