Jewellery business hit by turmoil

Gold prices in the country are running like a runaway horse. So far this month, the price of this precious metal has increased by around Tk 27,000 per bhori. Yesterday, Thursday, the price of 22-carat gold rose to nearly Tk 252,000 per bhori. However, at night, an announcement was made to reduce the price by Tk 3,149 per bhori. As a result, from today, Friday, gold will be sold at Tk 249,318 per bhori.

There are additional costs as well. To make gold jewellery weighing one bhori, 5 per cent VAT and 6 per cent making charges have to be paid. That brings the total cost to approximately Tk 277,000.

As geopolitical instability continues to increase globally, gold prices are rising rapidly in the international market. Influenced by this, the Bangladesh Jewellers Association (BAJUS) has been continuously increasing prices in the domestic market. Citing the lack of legal imports, gold prices in the country have always remained higher than in the global market.

Meanwhile, as gold prices continue to rise, bullion market traders are increasingly inclined to hold onto gold. This has led to a shortage of refined gold. Overall, sales of jewellery products have dropped.

Jewellery traders said that gold prices had long ago gone beyond the purchasing power of ordinary people. Even so, small and medium-sized jewellery businesses used to receive some small orders. Now, that too has stopped. As a result, they are worried about the future of the jewellery business.

When asked, former BAJUS director Anwar Hossain said that instability is prevailing in the gold market. If the government reduces VAT by 5 per cent and relaxes restrictions on bringing gold under the baggage rules, some relief would return to the market.

At the time of the country’s Liberation War, the price of gold per bhori was Tk 170. Over the past five and a half decades, gold prices have increased 1,639 times. Currently, the price of one bhori of 22-carat gold stands at Tk 252,467, the highest in the country’s history.

According to BAJUS data, in 2000 the price of one bhori of 22-carat gold was Tk 6,900. Over the next five years, it doubled. In 2010, gold prices tripled to Tk 42,165. Prices did not increase much until 2015, but over the following five years, the price rose by Tk 26,852 per bhori.

In the five years following the COVID pandemic, gold prices have risen rapidly. On 21 July 2023, the price of gold reached Tk 100,000 per bhori. It crossed Tk 150,000 in February last year and touched the Tk 200,000 milestone in October. Yesterday, it crossed Tk 250,000, although it later dropped slightly.

Compared to the global market, gold prices in the country are higher. As prices increase, the gap is also widening. According to data published on the Dubai Jewellery Group’s website, yesterday the price of 22-carat gold per bhori in Dubai, United Arab Emirates (UAE) was 6,284 dirhams or Tk 209,765 in Bangladeshi currency.

According to the website of the Bullion and Jewellers Association of India, the price of gold of the same standard in India yesterday was 173,463 rupees per bhori or approximately Tk 230,573 in Bangladesh.

Bangladesh’s gold market is very small. It is estimated that annual demand for gold in the country ranges from 20 to 40 tonnes. Of this, 10 per cent of demand is met through old jewellery. The remaining demand is met through gold brought from abroad under the baggage rules and through illegal channels.

According to the Passenger (Non-Tourist) Baggage (Import) Rules, a passenger can bring in about 10 bhori (117 grams) of gold bars from abroad in a year by paying customs duty of Tk 5,000 per bhori.

Former BAJUS general secretary Dewan Aminul Islam told Prothom Alo, “In the global market, the price of gold per ounce may soon cross five thousand dollars. If that happens, prices in the country will rise further. If Bangladesh Bank arranges to sell gold to traders at global market prices through commercial banks, then ordinary consumers would get at least some relief.”