The monarch is finding himself increasingly isolated with a bloody Maoist insurgency entering its tenth year and crippling the Himalayan Kingdom's social and economic sectors.
While Nepal's crucial allies, the US, UK and India maintain their arms embargo on the country, King Gyanendra, 58, is exploring new allies in China, Pakistan and Russia.
Ignoring international calls for reconciliation as a means of ending the conflict the king has sought to garner support from "friendlier" nations - plus military assistance - to fight Maoist rebels.
Yet the flurry of diplomatic visits to Beijing, Islamabad and Moscow have not delivered much in his "war against the Maoists".
In a bid to end the conflict, Maoist rebels hammered out a 12-point memorandum of understanding with an alliance of Nepal's seven mainstream political parties in November.
They also called on Gyanendra to hold an election to the Constituent Assembly for a new constitution.
In return, they would lay down arms and embrace multi-party democracy, a move hailed by Nepal's civil society and the international community.
The rebels also declared a unilateral ceasefire for four months.
Gyanendra, who first assumed the throne in 2001 when his brother King Birendra and the entire family were killed, dismissed the rebels' initiatives.
On 2 January, the ceasefire collapsed and rebels resumed their attacks against government forces, 50 of whom had been killed by mid-February.
The Nepalese army has lost more
than 50 men since 2 January
On 13 February, Nepal marked 10 years since the Communist Party of Nepal-Maoist (CPN-M) launched a military campaign to oust the country's monarchy and establish "the People's Republic".
The conflict has seen 13,000 Nepalese fatalities and thousands injured, according to Kathmandu-based Informal Sector Services Nepal (INSEC), a rights organisation.
In his nationally televised address marking a year since his February 2005 takeover, Gyanendra reiterated his plans to go ahead with parliamentary elections in April 2007 - much to the disappointment of the pro-democracy forces and the rebels.
Regional analysts say the king is leaving little room for compromise with opposition parties and rebels alike.
"The tragedy in Nepal today is that good sense is not prevailing on King Gyanendra," said SD Muni, a Nepal expert at Jawaharlal Nehru University in New Delhi.
"He's snubbing all friendly national and international advice. He seems to be digging his own grave."
In 2002 Gyanendra dismissed the elected government and, in February 2005, he sacked his prime minister and took direct control of the country, further alienating himself from the constituency.
Early this month, the political parties boycotted municipal elections, and less than 20% of eligible voters turned out to cast their ballots.
Pro-democracy students have
clashed regularly with the police
With no end in sight to the conflict, collateral damage and economic strain have adversely affected Nepalese society.
Thousands of refugees, mostly from the rural areas in the country, have been streaming through the open border into India, with which Nepal shares centuries-old cultural ties.
There, young Nepalese find work in restaurants, factories, brothels and as neighbourhood security guards.
"The rebels are abducting all young boys and girls in our villages and they are extorting donations from everybody," Hari Biswokarma, 15, who fled his village in Lamjung district last month and arrived in the north Indian city of Lucknow, said.
Too much violence
Irene Khan, secretary-general of Amnesty International, believes Nepalese society has seen far too much violence, particularly affecting young people.
"Without urgent action from the international community and all parties in Nepal, a new generation will grow up knowing nothing but bloodshed and conflict," Khan said.
The Office of the United Nations Human Rights Commissioner in Kathmandu says the resumption of full-scale conflict has put civilians at grave risk.
"Children in particular have been placed at risk, including as combatants within the CPN (Maoist), by indiscriminate action by the security forces, including aerial bombardment, and by the placement or abandonment of explosive devices," the head of the UN human rights mission, set up last year, said.
"Without urgent action from the international community and all parties in Nepal, a new generation will grow up knowing nothing but bloodshed and conflict"
As the regional heavyweight, India, continues to "wait and watch", US patience appears to be wearing thin. James Moriarty, the US ambassador to Nepal, recently urged the monarch to urgently start talking with the political parties.
"The year of authoritarian rule by the palace, it has clearly been unsuccessful," he said.
Significantly, he went on to ask the seven-party alliance to back out of last November's "uneasy" understanding with Maoist rebels.
"... We believe cooperation along current lines between the Maoists and the parties is fraught with danger - for the political parties themselves, and for the future of the Nepalese people," he said.
Referring to recent attacks by the rebels, Moriarty said: "Political terror by the Maoists, practised with particular ferocity in the run-up to the municipal elections, sets a fearsome precedent and could impair the democratic credentials of their political party partners."
Against this backdrop, the situation could deteriorate further, leading to further bloodshed, violence and political paralysis, analysts say.
It's clearly a no-win situation, they say, with neither side strong enough to pull off a military victory. For its part, the international community can only encourage democracy in Nepal, but not intervene, says Lok Raj Baral, a political scientist and former Nepalese envoy to India.
"Democracy is something that has to come from within, we should be able to indigenise our movement. Only then will we be able to sustain it."