What Global Gold and Silver Prices Mean for Nepal’s Economy in 2025

Introduction: Bullion Boom and Nepal’s Economic Pulse

In 2025, global gold and silver prices have surged to historic highs. With gold crossing $2,400 per ounce and silver nearing $35 per ounce, bullion is once again in the spotlight.

But what do these international price movements mean for a country like Nepal, where gold is a cultural asset, an economic indicator, and a central bank reserve?

This article explores the multi-dimensional impact of rising gold and silver prices on Nepal’s economy, trade deficit, monetary policy, inflation, and household behavior.

1. Nepal’s Relationship with Gold and Silver

Gold and silver play a vital role in Nepal’s society and economy:

• Gold is used in weddings, religious ceremonies, and as a form of savings

• Silver is popular in ornaments and traditional jewelry

• Nepal doesn’t produce either metal domestically—it imports 100% of its demand

• The domestic price is directly tied to global bullion rates and exchange rate (USD/NPR)

Recent Domestic Trends:

• Gold hit NPR 195,500 per tola in July 2025

• Silver reached NPR 2,320 per tola, a historic high

• Demand remains resilient during wedding seasons and festive months (Dashain–Tihar)

2. Why Are Global Bullion Prices Rising in 2025?

Key reasons for the global surge:

• Inflation hedging: Investors are buying gold to protect wealth

• Geopolitical tensions: Conflicts in Eastern Europe and Asia are fueling safe-haven demand

• Central bank purchases: China, India, and Turkey are increasing reserves

• Weaker US dollar: Makes gold cheaper in other currencies, boosting demand

• Investment demand: ETFs and retail investors are increasing exposure

These macroeconomic trends affect every gold-importing country—including Nepal.

3. Impact on Nepal’s Trade Deficit and Forex Reserves

Gold is among Nepal’s top 10 imports every year.

Data Snapshot (2024):

• Gold imports: NPR 60+ billion

• Forex spent: ~$500 million

• Silver imports: NPR 7 billion

Impact of Price Surge:

• Import volume may drop due to high cost

• But total import bill may remain the same or rise due to higher unit price

• Increases trade deficit and pressure on forex reserves

Central Bank Response:

• Nepal Rastra Bank (NRB) often imposes import quotas or temporary bans to ease pressure

• It may tighten gold import licenses to control outflow

4. Effect on Currency (NPR) and Balance of Payments

As bullion prices rise, demand for US dollars increases to fund imports.

• NRB must supply more USD from its reserves

• If remittance inflows slow down, this can weaken the Nepali Rupee (NPR)

• A weaker NPR further increases imported inflation—not just for gold, but fuel and food as well

This creates a vicious cycle of currency pressure and inflationary risk.

5. Domestic Inflation and Consumption Patterns

Gold prices act as an inflation signal for households.

How?

• Jewelry becomes more expensive → reduced purchases

• Families postpone wedding or festival jewelry buying

• Low-income groups may shift to silver or gold-plated alternatives

At the same time, people see gold as a safe investment during inflation:

• More people convert cash savings into gold coins/bars

• Jewelry shops see demand for gram-level gold products instead of large items

• Gold-backed loans rise as borrowers use ornaments as collateral

6. Bullion Prices and Nepal’s Capital Market Sentiment

When global uncertainty rises and bullion prices surge, there’s a shift in investor behavior:

While NEPSE and gold may not always move inversely, sentiment clearly affects capital flow.

7. Gold Loans and Financial Sector Impact

High gold prices mean higher loan-to-value (LTV) for gold-backed financing:

• Banks and cooperatives issue loans against gold collateral

• The same ornament fetches more credit at higher prices

• Increases liquidity in rural and urban households

• However, sharp fall in prices later can pose NPA risks

NRB often monitors gold loan exposure and may introduce LTV limits during extreme volatility.

8. Impact on Jewelers and Retailers in Nepal

Jewelers experience:

• Margin pressure: Rising wholesale costs reduce profitability

• Inventory shrinkage: Difficult to stock large quantities due to capital lock-up

• Shift in product design: More lightweight and cost-efficient models preferred

• Rise in exchange/old gold business: Customers trade old jewelry to buy new items

Major players in Kathmandu, Pokhara, Biratnagar, and Chitwan adjust their strategies accordingly.

9. Opportunities for Investors and Traders in Nepal

While physical gold may be expensive, bullion prices create new opportunities:

a. Digital Gold and ETFs

Though not yet common in Nepal, fintech platforms may soon allow:

• Fractional gold ownership

• Gold price-tracking investments

• NRB-regulated gold savings schemes

b. Commodities Trading Expansion

If SEBON and NRB modernize regulations, Nepal could launch:

• Gold futures trading

• Silver hedging tools for jewelers and exporters

c. Resale & Recycling

• High prices increase gold resale business

• Entrepreneurial women’s groups are also melting and remaking old jewelry for profit

10. Silver: The Underrated Economic Signal

Silver prices are up due to:

• Industrial demand (especially in solar panels and EVs)

• Affordability compared to gold

• Jewelry diversification by rural buyers

In Nepal:

• Silver is used in ornaments, utensils, and rituals

• Rising silver prices signal broader import inflation, especially in semi-urban households

11. What Can Nepal Do to Mitigate Bullion Price Impact?

To manage the macroeconomic pressure of gold/silver prices, Nepal should:

• Promote gold alternatives (e.g., sovereign gold bonds in NPR)

• Strengthen digital financial products linked to precious metals

• Expand tax compliance and traceability in bullion trade

• Educate households on financial diversification

• Monitor gold-backed loan risks to avoid asset bubbles

Conclusion: A Shiny Asset with Economic Shadows

Global gold and silver prices are not just a jewelry headline—they shape Nepal’s economy, trade policy, consumer behavior, and investment psychology.

“As bullion shines brighter, Nepal must manage the glow wisely.”

Whether you're a policymaker, investor, or homemaker, understanding the economic ripple effects of gold and silver helps you make smarter financial decisions in 2025 and beyond.