Nepal, Oct. 10 -- Police have arrested three Chinese nationals and seized 21.75 kilograms of gold from a house in Budhanilkantha, where a gold-melting operation was allegedly being run, raising suspicions that a new Chinese smuggling group has established a foothold in Kathmandu.

The Kathmandu Valley Crime Investigation Office (KVCIO) had been monitoring the group for about a week after receiving a tip-off. On Thursday morning, police intercepted a vehicle leaving a house in Chapali Height at around 6 am and recovered two kilograms of gold from its trunk.

A subsequent search of the house uncovered gold in different forms, including molten gold and gold already melted and moulded into biscuit-shaped bars. Police also found equipment used...