Why Are Gold Prices Skyrocketing?

The price of gold in Nepal soared to a record high on Thursday, reaching Rs 239,200 per tola (11.66 grams), the highest price in the country’s history. According to the Federation of Nepal Gold and Silver Dealers’ Association (FENEGOSIDA), gold prices have surged by Rs. 79,000 over the past year. In mid-October last year, gold was priced at Rs. 160,000 per tola, but by October 9 this year, it had climbed to Rs 239,200 before dropping to Rs 235,000 on Friday, October 10.

Rapid Price Fluctuations Over the Years

The domestic gold market of Nepal has witnessed sharp fluctuations in recent years. In mid-October 2022, gold was priced as low as Rs 92,500 per tola, rising to Rs 130,000 by mid-September 2023. It then dropped to Rs 113,200 per tola in mid-October 2023, while by mid-September 2024, it had peaked at Rs. 161,800.

Sharp Rise in Late September

Gold prices have shown notable volatility within short timeframes, with the most dramatic fluctuations seen in mid-August to mid-September. FENEGOSIDA’s data shows that during the review month, gold traded between Rs 193,500 and Rs 217,100 per tola, marking a difference of Rs 23,500.

Senior Vice President of FENEGOSIDA, Dinesh Ratna Shakya, noted that this upward momentum is likely to continue, making the one-month period between mid-September to mid-October the month with the highest price fluctuations over the past year.

Why Are Gold Prices Rising?

The surge in Nepal’s gold prices mirrors the global trend. According to the BBC, the international gold price surpassed USD 4,000 per ounce on Wednesday, driven by growing investor concerns over global economic and political instability.

This spike followed U.S. President Donald Trump’s decision to raise tariffs broadly on international trade, which has fueled uncertainty in global markets. Since Nepal imports gold from the international market, domestic prices rise in tandem.

Another factor is the weakening of the Nepali rupee against the U.S. dollar. The exchange rate rose from Rs 134.70 per dollar last October to Rs 142.34 on Wednesday, making gold more expensive in local currency terms.

Lower Interest Rates and Geopolitical Tensions

Shakya attributes the price surge to several factors, including falling global interest rates, gold accumulation by central banks, and heightened geopolitical tensions. “Central banks in the U.S., Canada, the U.K., the EU, Australia, Mexico, and Russia have all reduced interest rates amid inflation and economic slowdown,” he said. “Lower rates have pushed investors toward gold and silver as safe havens.”

Conflicts such as the Russia-Ukraine and Israel-Palestine wars, tensions between India and Pakistan, and instability in Southeast Asia have also created a sense of insecurity, prompting increased investment in gold. North Korea’s ongoing missile tests have added to these global fears.

BRICS and the Push for Dedollarization

BRICS nations, including China, India, Russia, Brazil, and South Africa, are working to reduce dependency on the U.S. dollar in global trade. To support this strategy, their central banks have been accumulating large gold reserves. According to the World Gold Council, central banks purchased 1,045 tons of gold in 2024, continuing a trend of buying over 1,000 tons annually since 2022, compared to an average of 481 tons per year between 2010 and 2021.

Impact of Trump’s Economic Policies

Recent U.S. tariff hikes under President Trump have further influenced gold prices. Tariffs on goods from India, China, Mexico, Canada, ASEAN nations, and the European Union have increased by up to 100 percent, leading to a one-third rise in global gold prices since April.

Shakya emphasized that amid such global and domestic economic conditions, many investors continue to view gold as a secure investment option, driving its demand and pushing prices to unprecedented levels.