Nepal’s Gold Syndicate Shattered? How the Supreme Court’s Interim Order May Affect Traders, Consumers & Gold Price in Nepal

Gold has been all over the news lately. First due to the sharp drop due to reduction of custom duty by the Government and now for some other reasons than the price fluctuation. And this time around, the apex court of Nepal had to intervene. As we all know that gold isn’t just a shiny ornament in Nepal—it’s deeply rooted in our traditions, celebrations, and savings. But did you know the gold earrings you long for or the necklace you proudly wear during the festivals are part of a system that’s stirred up debate for years?

Here’s the context: Nepal’s gold market has long been unofficially regulated by private umbrella organizations like Federation of Nepal Gold and Silver Dealers' Associations (FENEGOSIDA) and Federation of Nepal Gold Silver Gem & Jewellery Associations (FNGSGJA). FENEGOSIDA has held a central role in setting prices and supplying gold to the small traders. And hence, anyone looking to start a gold jewelry shop was required to be a member of an association affiliated to FENEGOSIDA or FNGSGJA. This also meant if someone did not comply then they would not get the supply of the gold.?

But where did these federations derive the power from? Is there any law that recognizes these organizations and the kind of influence they wield? The answer is NO! These are umbrella organizations that were supposed to work for the welfare of the gold and silver traders but due to acceptance by the majority of such entrepreneurs, the federations started exercising these immense power and influence without any legal backing. So, if someone were to start a gold/silver related business, it had to automatically be a member of a local organization or association recognized by these federations.?

Ideally the Government should have stepped in to streamline this process of licensing, setting gold prices as well as regulating the supply. But in lack of any government initiative, the Federation seemed to have stepped in. As per the forex laws of Nepal, only commercial banks can import gold in Nepal and then the FENEGOSIDA would buy the gold from the bank to further distribute to the traders. It’s not that the Government did nothing. It formulated “Procedure on Gold Sale and Distribution, 2011” but these were also lobbied for by these federations.

And over the years, these syndicates became stronger and stronger creating a sort of monopoly. This did not go well with every trader because with power comes corruption and favoritism, which ultimately leads to unfair practices like only the favored traders getting the required supply of gold. As you know there is a limit in the amount of gold that can be imported in Nepal and if the federation could decide on who gets how much gold without any basis, you can only imagine what could have been going on for years.????

Thanks to a recent ruling from the Honorable Supreme Court of Nepal, this monopoly-like structure is now being questioned and may be scrutinized further. This was in response to a writ petition filed by one Mr. Sagar Dhungana on behalf of a well known jewelry enterprise Riddhi Siddhi Jewellers Pvt. Ltd. As per the ruling, the traders no longer need to be members of any association or federations to buy gold from banks. Meaning, the traders can buy gold directly from the commercial banks. It’s a step towards inclusivity for smaller traders, but it’s also sparked questions about the future of the gold market. Let’s dig into the concerns and uncover the truth about what this ruling really means.

Big Questions on Everyone’s Mind

When the Supreme Court's decision hit the headlines, many people started asking:

• Who’s going to disclose the daily gold price now? Will it be chaos if there’s no single source of reliable information?
• What about quality control? Without strict oversight, can we still trust the purity of the gold we’re buying?
• Will prices start to vary wildly between cities or traders?

At first glance, it might seem like this ruling has thrown the market into uncertainty. But let’s clear the air.

What’s Actually Changing

The Supreme Court’s decision isn’t as disruptive as it might seem. And it’s also an interim order. So, the final decision may be something else. At first stance, the Supreme Court has observed that the requirement to obtain a membership or approval from an association affiliated to federations like FENEGOSIDA or FNGSGJA to buy gold seems to affect the constitutional right to profession of the traders who have not obtained membership or approval of such federations. The Supreme Court further ruled that if the other conditions set out in the Procedure on Gold Sale and Distribution, 2011 are complied with then the traders should not be stopped from buying the gold just because they do not have the aforementioned memberships or approvals.?

So, here’s a summary of what’s staying the same and what’s changing:

What’s Staying the Same:

• Daily Price Disclosure: FENEGOSIDA will still use the standard gold pricing formula to disclose the daily rate across Nepal, ensuring uniformity.
• Market Oversight: FENEGOSIDA’s role in promoting market stability and fairness remains intact.

What’s Changing:

• Traders no longer need to be FENEGOSIDA members to buy gold from banks. That’s it!
• This ruling gives smaller, independent traders a fair shot at participating in the market, breaking down barriers that previously limited competition.

Why This Matters

Previously, traders who weren’t part of FENEGOSIDA or FNGSGJA often found themselves excluded from the system, unable to buy gold from banks. This created barriers for smaller jewelers and dealers, limiting competition and keeping the market tightly controlled.

Now, these barriers are gone. Any trader, regardless of federation membership, can purchase gold from banks as long as they follow Nepal Rastra Bank (NRB) guidelines. This opens the door to more players in the market, promoting fairness and inclusivity.

Addressing the Concerns

So, here’s what you need to know may happen after the court ruling:

1. Gold Prices Will Stay Consistent There’s no need to worry about fluctuating rates across cities or traders. FENEGOSIDA will continue to use the standard gold pricing formula and disclose the daily rate, just as they’ve always done.
2. Increased Competition Benefits Consumers With more traders able to join the market, buyers might see better offers and more choices. However, the overall structure for pricing and quality control ensures stability, so there’s no risk of a free-for-all.

To put it simply, FENEGOSIDA’s role isn’t about setting gold prices—it’s about following a government-approved pricing formula and making the daily rate public. While the federation has often been criticized as a syndicate, it has played a key role in maintaining market order in the absence of robust government regulations.

That said, the monopoly-like structure created by these federations has caused frustration among smaller traders. The Supreme Court’s ruling addresses this imbalance, making the gold market more inclusive while keeping the essential systems in place.

What This Means for the Gold Market

Nepal’s gold trade is stepping into a new era of inclusivity. The system remains stable, but it’s now more accessible to smaller players. While this might not drastically change prices or the way you shop for gold, it’s a significant step toward a fairer market.

The big takeaway? The shiny gold you buy during festivals or weddings is still backed by the same standards and transparency you’ve come to expect. The only difference is that the market is now open to more traders, giving them the opportunity to compete and grow.

What’s your take on this change? Do you think it will make the gold market stronger or introduce new challenges? Let’s talk about it in the comments