Gold Prices Fall After Tihar: What It Means for NEPSE and Investors

Introduction: Post-Tihar Calm Brings a Gold Price Dip

Every year, Tihar marks one of the most vibrant economic periods in Nepal. With increased gold jewelry sales, festive spending, and heightened liquidity movement, it’s also a key point for market analysts. But this year, as the lights dimmed after Tihar, something noticeable happened — gold prices began to decline.

The drop came after weeks of strong demand during the festival season, where gold had reached record highs. Now, with festive demand cooling and global gold markets showing correction, prices in Nepal are sliding. Interestingly, this shift coincides with a gradual uptick in NEPSE, hinting that investors may be reallocating funds from safe assets like gold back into equities.

1. Why Gold Prices Are Falling After Tihar

Gold’s decline after Tihar 2025 can be traced to both seasonal and global economic factors:

a. End of Festive Demand

During Tihar, demand for gold spikes as jewelry purchases, wedding preparations, and cultural offerings drive consumption. Once the festival ends, local jewelers reduce orders, and buyers step back, easing market pressure. This natural seasonal slowdown always leads to temporary corrections in domestic prices.

b. Global Price Correction

Internationally, gold prices have come under pressure due to:

• Stable U.S. inflation data suggesting interest rates may remain steady, lowering gold’s appeal.

• Rising equity confidence worldwide, pulling funds away from safe-haven assets.

• Stronger U.S. dollar, making gold more expensive in other currencies.

As Nepal’s gold price is directly linked to global bullion rates, local prices follow the same downward trajectory.

c. Strengthening Nepali Rupee

Another supporting factor is the appreciation of the Nepali rupee against the U.S. dollar, partly due to strong remittance inflows and a narrower trade deficit. A stronger rupee means imported gold becomes slightly cheaper, amplifying the local price drop.

2. How Gold and NEPSE Move in Opposite Cycles

Historically, gold and NEPSE have shared an inverse relationship. When investors fear uncertainty — be it political instability, inflation, or falling stock prices — they flock to gold. But when confidence grows in the stock market, gold demand fades.

Recent Example:

• Before Tihar (October 2025): NEPSE remained under pressure while gold hit new highs, signaling risk aversion.

• After Tihar (Late October 2025): As gold prices declined, NEPSE started showing signs of stability and recovery.

This rotation is classic investor psychology — when one asset looks “overheated,” funds shift to the other.

3. Investor Psychology: Liquidity Returning to NEPSE

With festive spending slowing, remittance inflows continuing, and fewer outflows into gold, liquidity is improving in Nepal’s banking system.

a. Impact on Credit and CD Ratio

Banks’ Credit-to-Deposit (CD) ratios are easing, giving them more lending room. This, in turn, supports:

• Margin lending for stock investors.

• Business loans that can stimulate earnings and confidence in NEPSE-listed companies.

b. Shift from Defensive to Growth Mindset

During uncertain periods, investors prefer defensive assets like gold. However, after major festivals, when spending pressure declines and savings rise, investors often return to growth assets such as equities.

This explains why, historically, NEPSE tends to perform better in the months following major festivals, particularly when inflation and global risks are contained.

4. Global Gold Market Trends: What Nepal Can Learn

Even though domestic conditions shape short-term trends, Nepal’s gold market is tightly linked to global developments.

a. U.S. Federal Reserve Policy

The Fed’s stance on interest rates plays a huge role. When rates are expected to rise, gold becomes less attractive because it yields no interest. Conversely, lower rates make gold more appealing as a store of value.

In late 2025, markets expect the Fed to hold rates steady or even consider cuts in 2026 — but with reduced geopolitical tension, gold demand has softened.

b. China and India’s Gold Demand

Neighboring giants China and India heavily influence global bullion prices. A slowdown in India’s post-Diwali jewelry purchases or a weaker Chinese economy typically suppresses gold demand — both scenarios seem to be unfolding this year.

c. ETF Outflows

Globally, exchange-traded funds (ETFs) that track gold have seen net outflows, signaling reduced institutional interest. This often translates into lower physical demand and falling prices worldwide.

5. Implications for Nepali Investors

The fall in gold prices doesn’t necessarily mean a negative outlook. It can create two major opportunities for smart investors in Nepal:

a. Accumulate on Dips

For long-term savers who prefer holding gold as a hedge, price corrections offer a buying opportunity. Especially when global uncertainty remains moderate, accumulating gold gradually can help diversify portfolios.

b. Reallocate Toward Stocks

Those with a moderate risk appetite may see this as the right time to re-enter NEPSE. With improving liquidity, easing CD ratios, and renewed investor confidence, select sectors like banking, hydropower, and insurance could see upward movement.

6. Sectoral Impact in NEPSE

Let’s break down how different NEPSE sectors may respond in the post-Tihar and post-gold-decline environment:

This balanced environment often favors broad-based market recovery, especially if investors rotate away from non-productive assets like gold toward equities.

7. Economic Viewpoint: Why the Shift Matters

The decline in gold prices after Tihar is not just a market event — it’s a reflection of broader economic balance in Nepal.

a. Lower Gold Imports Help the Economy

Gold is one of Nepal’s largest import items. A fall in price reduces the import bill, helping maintain forex reserves and exchange rate stability.

b. Supporting Investment Flows

As less money is locked in gold and jewelry, more capital becomes available for business investment, saving deposits, and stock trading — boosting economic circulation.

c. Consumer Sentiment

Falling gold prices can also improve consumer confidence for weddings and festive buyers who were previously discouraged by high rates.

8. What to Watch Next

Investors should keep an eye on a few indicators in the coming weeks:

1. Global Gold Spot Price: If it drops below USD 2,200/oz, further local correction is likely.

2. NEPSE Turnover Volume: Rising turnover with stable index levels indicates improving confidence.

3. Remittance and Inflation Trends: Continued strong remittance inflow and low inflation will keep liquidity healthy.

4. NRB’s Monetary Policy Moves: Any relaxation in margin lending or CD ratio targets can further fuel NEPSE growth.

Conclusion: Gold’s Dip Could Spark NEPSE’s Rise

As gold prices retreat after Tihar 2025, Nepal’s financial ecosystem is finding renewed balance. The festive surge is over, liquidity is returning, and investor sentiment is shifting cautiously back to equities.

For long-term investors, this phase is a moment of transition — not tension. Gold remains a vital hedge, but opportunities in NEPSE may now offer better short-term returns, especially in the banking and hydropower sectors.

In essence, the post-Tihar scenario signals optimism: stable remittances, contained inflation, and reduced gold imports together create fertile ground for Nepal’s stock market to grow stronger in the months ahead.