Artificial shortage hits Gold and Silver market as traders hold stocks expecting price surge

KATHMANDU: The country’s largest gold trading hub, New Road, witnessed unusual scenes on Wednesday, with jewelry stores crowded by buyers but many returning empty-handed. Despite the rush to purchase gold ornaments, traders repeatedly told customers that there was “no gold in stock.”

Most shopkeepers in the area refused to sell, claiming their inventory had run out. “Gold and silver prices are increasing daily. If we sell today, we lose tomorrow. It’s better to wait and sell at a higher price,” said one jeweler, candidly admitting that traders are deliberately holding back stock to maximize profits.

The artificial shortage comes amid record-breaking daily increases in gold prices, creating panic among both retailers and consumers. Market observers say traders are intentionally keeping gold off the shelves in anticipation of further hikes, creating scarcity in an already tense festive market.

Former President of the Federation of Nepal Gold and Silver Dealers’ Association (FENEGOSIDA), Manik Ratna Shakya, confirmed that the shortage has started to affect both gold and silver. “The government only allows the import of up to 20 kilograms of gold per day, while the market demand is far higher. Supply cannot meet demand, resulting in scarcity,” he explained.

Shakya attributed the surge in global gold prices to the weakening US dollar, triggered by instability in the American economy. “As the dollar weakens, investors and central banks worldwide are increasing their gold reserves for security, which is pushing gold prices even higher,” he added.

The Federation’s Senior Vice President, Diya Ratna Shakya, said the sharp price rise has discouraged small investors from buying gold, further disrupting the market balance. Similarly, First Vice President Bhaichandra Shrestha noted that many consumers who planned to purchase gold during the upcoming Mangsir wedding season are buying early, intensifying the demand and causing temporary shortages.

Shrestha further pointed out that some traders may be deliberately creating a false scarcity by refusing to sell gold they already possess, hoping to profit from future price hikes. He also highlighted international monetary trends, saying, “Countries like South Africa, Brazil, Russia, China, and now India are working to introduce a BRICS currency to rival the US dollar. If that succeeds, the dollar’s value will fall, and gold prices will rise even more. China and Russia are already exchanging dollars for gold, tightening the global supply.”

Market analysts forecast that gold could reach USD 5,000 per ounce by 2030, with Nepali traders predicting that domestic prices could soon cross NPR 300,000 per tola.

Gold demand traditionally spikes during Dashain, Tihar, and wedding seasons, when jewelry purchases peak. Despite soaring prices, buyers are still eager, fearing even steeper rates in the coming weeks. However, with dealers charging arbitrary rates under the pretext of shortages, consumers are now facing both high prices and limited availability.

As Nepal’s festive season approaches, the artificial shortage of gold and silver has not only strained consumers but also exposed weaknesses in the country’s import and regulatory mechanisms — with traders, anticipating greater profits, choosing to stockpile rather than sell.