Amid global instability, gold prices are soaring in the international market, pushing prices up in Bangladesh as well. In just the current month, gold prices have risen by Tk 10,000 per bhori (11.664 grams). The volatility has caused jewellery sales to collapse across the country.
Several jewellers said that for years gold prices have been excessively high, and purchases are now limited mostly to weddings or family events. With the latest surge, customer footfall at jewellery stores has dwindled further.
If prices continue to rise in the global market, gold prices are likely to increase even more in Bangladesh. Although Bangladesh imports very little gold through legal routes, people involved in this sector warn that if global prices rise further, small and medium-sized jewellery businesses will face severe difficulties.
According to the Bangladesh Jewellers’ Association (BAJUS), the price of 22-carat gold was Tk 175,788 per bhori at the beginning of this month. As of last Wednesday, after five hikes, it stood at Tk 185,947 per bhori, an increase of Tk 10,159 in just 10 days.
Gold prices are closely tied to global economic conditions. Periods of uncertainty in the economy almost always see a surge in gold prices, as countries invest in gold.
Historically also, gold prices have spiked the most during times of high inflation. During the second wave of the COVID-19 pandemic in the first week of August 2020, the global price of gold exceeded USD 2,070 per ounce (31.1 grams).
When the US President Donald Trump imposed retaliatory tariffs on various countries early last month, it triggered a new wave of uncertainty in the global economy. This caused gold prices to soar uncontrollably, reaching USD 3,400 per ounce.
Currently, global gold prices have surpassed USD 3,600 per ounce. The main grounds behind this include geopolitical tensions and investor anxiety. The US Federal Reserve is expected to cut interest rates next week, fuelling the rally. On Wednesday, gold price in spot market briefly touched USD 3,654 per ounce.
According to a Reuters report, Australian lender ANZ raised its gold price forecast last Wednesday. It now expects prices to hit USD 3,800 per ounce by year-end, and possibly surpass USD 4,000 by next June.
Speaking about the domestic jewellery business, former BAJUS general secretary Dewan Aminul Islam told Prothom Alo, “Business is in a dire state. With prices climbing, sales have dropped sharply. There are almost no buyers in the shops.” He added that if global prices continue to rise, the domestic market will inevitably follow.
Meanwhile, many consumers are selling rather than buying jewellery. Jewellers say customers who purchased gold years ago are now cashing in. For instance, if someone bought a bhori of 22-carat gold five years ago for Tk 69,867, they could now sell it for around Tk 154,000. It’s a profit of Tk 84,000 despite the fact that jewellers deduct around 17 per cent from the current weight when determining resale value.
Will prices rise further?
During Bangladesh’s Liberation War in 1971, a bhori of gold cost just Tk 170. Over the past five decades, the price has risen nearly 1,093 times. Today, a bhori of 22-carat gold costs around Tk 186,000, with the steepest increases occurring over the past 25 yearss.
BAJUS data shows that in 2000, a bhori of 22-carat gold cost Tk 6,900. Within five years, the price doubled. By 2010, it had tripled to Tk 42,165. Although prices remained relatively stable until 2015, they surged by Tk 27,000 per bhori over the next five years.
In 2022, the price of gold peaked at Tk 88,000. Next year on 21 July 2023, gold prices crossed the Tk 100,000 mark for the first time, and by February this year, it exceeded Tk 150,000 mark the first time.
Asked if prices could rise further, BAJUS board member Anwar Hossain said, “There’s just Tk 15,000 short before gold prices hit Tk 200,000 per bhori. If global prices increase by another USD 100 to 120 per ounce, domestic prices will also cross Tk 200,000.”
In response to another question Anwar Hossain said, “The gold market is highly volatile, “If anyone have idle money, they may invest in gold. Otherwise, it’s not a wise choice.”