In the latest such hike, the price of per bhori 22-carat gold rose by Tk1,166 on August 27
The business of gold jewellery in the country is going through a tough time as buyers feel wary of buying gold ornaments due to its soaring prices.
The prices of gold have gone up 84 percent in eight phases in the last eight months, which is the highest in the last seven years.
During this period, the prices increased by Tk10,556 per bhori.
Only in August, the price was hiked four times.
In the latest such hike, the price of per bhori 22-carat gold was increased by Tk1,166 on August 27.
The price hike on global market is causing the repeated rise in prices, according to jewellers.
Ganga Charan Malakar, president of Bangladesh Jewellery Association, said they were facing losses due to the price spiral.
The sale of gold ornaments has declined by half, as people do not want to buy these stuffs at such high prices, according to jewellery traders at the Baitul Mukarram market, the largest gold jewellery market in the country.
The sale has now come down to Tk50 crore from Tk100 crore per month, the traders told The Business Standard.
People were purchasing gold when prices were lower. Now potential buyers prefer to wait for a dip in price before making a decision, the traders said.
Bank official Tanvir Sohag went to the Baitul Mukarram market to purchase several bhori of gold ornaments for his wedding, but he bought only one bhori of jewellery due to the high price of gold.
Later, he brought ornaments from Dubai through one of his friends.
“Though making charges are much higher abroad, the overall prices of the ornaments are less than that of Bangladesh,” said Tanvir.
A salesman at a jewellery shop in the capital’s New Market said, “People, apart from the upper class, are now staying away from the gold market for weddings.”
Blaming the price hikes on global market, he said many traders would have to leave the profession if the situation continued.
Reasons behind spiking prices
Bangladesh Jewellery Association claims that the price of gold has increased in the country as it has risen in the international market.
In the last eight months, gold price in the international market rose by 18.29 percent. On September 4, gold in the international market was being sold at $49.93 per gram.
The president of the association said the price of gold at the domestic market reflects the prices at the global market.
“If the prices remain low here, gold will be smuggled out,” he added.
There are several reasons for the global price hike of gold.
The ongoing trade war between the USA and China as well as the hostile relations between the USA and Iran have influenced the gold prices.
“US President Donald Trump imposed 25 percent tax on imported Chinese products. In retaliation China increased its gold reserve and discharged dollars in the market, which impacted international gold price,” said Abu Ahmed, professor of economics at the University of Dhaka.
The Brexit issue in Europe and the recent Kashmir issue have strengthened gold’s value against US dollar as well.
As the dependency on different currencies, including dollar, has decreased, the global gold market has seen strong demand.
Ahsan H Monsur, executive director of Policy Research Institute of Bangladesh, said, “Decline in returns from financial assets as well as from dollar, euro and yuan has encouraged people to resort to gold.
“Though there is no return from gold as well, the frequent ups and downs in gold prices benefit people to some extent.”
The gold policy of Bangladesh
The first-ever gold policy was formed in October 2018, according to which one has to apply for a licence to import gold from abroad.
The application forms for the licences have been made available from March 18, 2018 and it will continue until September 30.
Jewellers have already been applying to Bangladesh Bank for the licences.
Apart from the licence holders, anybody can bring gold up to 100g tax free in baggage while up to 234g can be brought in paying tax.
There is no reliable figure of the amount of gold in stock of local jewellery businesses.
However, there is a demand for around 35 lakh bhori of gold in the country, according to different sources.
In the absence of any government policy on gold import, around 90 percent of this gold came in illegally, so the government did not get any revenue from this, said jewellers.
Sources in the National Board of Revenue say 18 lakh bhori of gold has been legalised from June 25 to June 30.
The businesses had to pay Tk1,000 per bhori of gold to make it legal.
Besides, Tk3 crore has also been collected from legalising diamond and silver during the period.