Kathmandu: The price of gold in the Nepali market surged sharply on Sunday following the government's decision to increase customs duty on gold by 10 percent in the budget for the upcoming fiscal year.

According to the Nepal Gold, Silver, Gems and Jewellery Federation, the price of hallmark gold increased by Rs 20,500 per tola in a single day, reaching Rs 311,100 per tola.

Gold was traded at Rs 290,600 per tola on Friday before the new customs duty announcement.

Silver prices also witnessed a significant rise. The price of silver increased by Rs 305 per tola, climbing to Rs 5,345 per tola on Sunday from Rs 5,040 per tola on Friday.

The increase comes after the government raised customs duty on gold imports, a move that traders say has directly affected domestic market prices.

Despite the sharp rise, current prices remain below the all-time highs recorded on Magh 15, when gold was traded at Rs 339,300 per tola and silver at Rs 7,505 per tola.

Market analysts say that in addition to the government's tax measures, fluctuations in international precious metals markets have also contributed to changes in gold and silver prices in Nepal.