Gold imports falls to three times

Gold import has plunged by almost three times in last three years.
"The country imported Rs 9.87 billion worth gold in the first five months of the current fiscal year compared to Rs 25.54 billion in the same period of fiscal year 2009-10," according to the central bank.
However, in the same period last fiscal year, the precious yellow metal has seen a whopping drop to Rs 1.33 billion due to government ban on the import that has hit the dollar reserve due to cross border flow at the cost of import duty difference.
Currently, the domestic market is witnessing a shortage of the gold fuelling the price despite the price in the international market has been decreasing.
"The banks are not been able to supply according to the market demand fuelling the price in the market," Nepal Gold and Silver Dealers Association president Tej Ranta Shakya said, adding that Nabil Bank's 50 kg gold was sold out in an hour on Wednesday and Prime Commercial Bank's 50 kg was also sold out yesterday and there is no gold today in the market that will put the pressure of price hike on Sunday.
"Despite rising price, the domestic market's appetite has started to increase also due to marriage season," he added.
Similarly, gold had another positive year in the international market, ending nine per cent higher in US dollar price terms and rising even further in most currencies, according to World Gold Council report 2011.
In spite of an interim increase in volatility, which affected all financial markets, gold outperformed a large number of asset classes – reinforcing its role as a foundation asset in portfolio construction, it said, adding that gold provided liquidity when investors needed it the most, acting as a risk management vehicle and also served as a currency hedge throughout the year, in particular against the US dollar.
While such inverse relationship pushed gold prices down toward the end of 2011, in part driven by profit taking and portfolio rebalancing, it is believed that gold fundamentals of supply and demand remain robust, according to the report that expect it continue to support its demand.
After a tumultuous year in financial markets around the world, gold was one of few asset classes to deliver positive returns.
Gold’s price appreciation was generally higher in currencies other than the US dollar, especially in developing markets, with the exception of China, as they saw marked declines of their currencies against the US dollar in the latter part of the year.
True to its role as a vehicle for diversification and risk management, gold outperformed a large majority of assets, including oil, on a risk-adjusted basis during a year of marked uncertainty and increased volatility. However, gold’s performance was not all smooth sailing throughout the year, particularly during the latter months.
Many investors saw gold as one of the few assets able to preserve capital and protect against tail risks, increasing their participation in the market especially during the summer and by early August, gold had broken the $1,800 per ounce level and reached a record high of $1,895 per ounce on the London PM fix on September 6, having traded as high $1,921 per ounce intra-day.
In all, gold’s price pullback of 15 per cent was labeled by some commentators as a break in gold’s multi-year trend. On the contrary, a careful analysis of gold’s historical performance shows that it has experienced various pullbacks over the last 10 years.