Gold imports in Nepal have dropped significantly over the past year, driven by soaring international prices and a decline in consumer purchasing power. According to data from the Department of Customs, the country imported gold worth Rs 17.13 billion during the first 11 months of the current fiscal year (FY) 2024/25, a steep decline from Rs 25.74 billion during the corresponding period of last fiscal year. In FY 2022/23, gold imports for the same period stood at Rs 43.54 billion.

Industry experts attribute this decline to weakening demand in both domestic and global markets as gold prices have surged. Arjun Rasaili, President of the Federation of Nepal Gold and Silver Dealers’ Association (FENEGOSIDA), noted that consumers are increasingly reluctant to buy gold amid broader economic downturns and reduced spending power. "People’s enthusiasm for wearing gold jewellery has declined along with their financial capacity," Rasaili said, adding that the global slowdown has affected demand beyond Nepal as well.

The traditional wedding season, spanning the Nepali months of Baisakh and Jestha (mid-April to mid-June) , typically boosts gold sales to as much as 40 kilograms per day. However, Rasaili stated that this year, daily sales failed to exceed even 10 kilograms during the peak period. “People still wear gold, but they’re buying less. Previously, it was common to order elaborate necklaces weighing five to seven tolas. Now, most buyers settle for one and a half to two tolas,” he said.

Government policies have also played a role in dampening imports. This fiscal year’s budget introduced a 20% customs duty on gold imports, a move Rasaili said had a lingering effect on market activity until mid-November. In response to India’s reduction of its gold import duty from 15% to 6%, Nepal later adjusted its own rate to 10% in mid-November.

Despite falling imports, more individuals are reportedly selling gold, further reducing the need for fresh imports. The government’s new decision, announced in the budget for upcoming fiscal year, to impose a 2% luxury tax on all gold purchases exceeding Rs 1 million has drawn criticism from traders, who say the policy has added further pressure on the industry.

Additionally, Rasaili pointed to a growing trend of people bringing gold from abroad, which has contributed to the decline in formal transactions through the banking system.

Gold prices in Nepal have risen by over Rs 70,000 per tola in the past year. On June 21 last year, one tola of hallmark gold was priced at Rs 124,055. As of June 20 this year, the price has surged to Rs 194,700. Industry insiders cite global market volatility, U.S. interest rate policies, geopolitical tensions, high customs duties, and supply-demand imbalances as the key drivers of the price spike.