Gold price plunges in Nepal after authorities cut 50% duty

The price of gold significantly dropped by Rs 15,900 per tola (11.664 grams) on Monday following the Nepal government's decision to slash the customs duty on the precious yellow metal by half.

According to the Federation of Nepal Gold and Silver Dealers Association, the price of hallmark gold has been set at Rs 151,300 per tola for Monday, down from Rs 167,200 on Sunday.

The government reduced the customs duty on gold imports to 10 per cent from 20 per cent. The decision was taken during a Cabinet meeting last Thursday, officials said.

Through its budget, India reduced the customs duty on gold and silver from 15 per cent to 6 per cent.

In contrast, Nepal increased the gold customs duty by 5 per cent, raising it to 20 per cent in the current fiscal year's budget.

This made gold more expensive in Nepal and cheaper in India, leading to the smuggling of the yellow metal.

According to the Federation, the imbalance in customs duties due to the open border encouraged illegal trade.

To prevent such trade, the federation suggested the customs duty on gold be fixed at 8 per cent.