Gold prices surge by over 20,000 rupees post-budget

A sharp increase in customs duties announced in the new budget has pushed gold prices up by NRs 20,500 per tola in a single day.

Gold price was NRs 290,600 per tola on Friday. Today it costs NRs 211,100. The rise in price occurred after the government doubled the customs duty on gold imports from 10% to 20% through the budget unveiled on Friday. 

According to Mukesh Jodhani, a gold jeweller in Kathmandu, the dramatic rise was driven primarily by the new customs policy, which took effect immediately after the budget announcement. 

Gold traders were already expecting that the new budget would increase the customs following India’s recent increase in customs duty on raw gold from 6% to 15%, said Jodhani.

The new budget abolished the 2% luxury tax on gold imposed in the previous budget; it simultaneously doubled the customs duty, significantly increasing the cost of imports. Additionally, the government has imposed a 0.5 percent skill promotion fee on gold jewellery.

According to a member of the Federation of Nepal Gold and Silver Dealers' Association, the skill-promotion measure is a positive step, but he remains skeptical about its impact. He said the federation has little information about how skills development initiatives will be implemented or how the tax revenue will be utilised, and is unaware of any consultations conducted on the matter.

He added that younger generations are largely uninterested in entering the profession because of the demanding nature of the work. Mastering the craftsmanship requires years of training and patience, he said, whereas younger generations increasingly seek quicker returns and immediate gratification. “The government needs to promote and design programmes that reflect this reality,” he said. 

The new budget has also raised the customs duty on silver from 10% to 20%. As a result, silver prices climbed by NRs 305 per tola on Sunday, reaching NRs 5,345 per tola, compared with NRs 5,040 per tola on Friday.