Gold slumps to two-year trough
The prices of gold recorded the biggest single-day fall yesterday with a 6.5 percent slump per bhori as the value of the precious metal continues to decline on the international market due to weaker demand.
The price of 22-karat gold came down by Tk 3,615 to Tk 51,322 a bhori (11.66 grams), the lowest in the last two and a half years, jewellers said.
With yesterday's fall, the gold prices plunged by 8.6 percent in just two days; this was the fifth time this year the bullion prices were brought down by Bangladesh Jewellers' Samity, a platform of jewellery shop owners.
On Monday, the price of 22-karat gold dropped by Tk 1,225 or 2.18 percent to Tk 54.937 a bhori.
“As the gold price is declining on the international market, we adjusted the local price too,” said Dilip Roy, president of the Jewellers' Samity.
The new price will be effective from today, he added.
The price of 21-karat gold dropped by Tk 3,481 a bhori yesterday, 18-karat by Tk 2,959, and traditional gold by Tk 2,799.
Anwar Hossain, president of Bangladesh Jewellery Manufacturers and Exporters Association, said the prices dropped by $150-$200 on the international market in the last four days.
“It will create a new buyer base in the local market as people can purchase the precious metal at comparatively lower prices,” he said.
Hossain earlier said crisis in the Middle East is subsiding but gaining momentum in North Korea.
“As a result, wealthy people in the Middle East are regaining their confidence in purchasing foreign currencies instead of gold to save their idle money,” he said.
Major foreign currencies such the US dollar and the euro are gradually becoming stronger as their economies are now recovering from financial meltdown, he said. So the rich are buying less gold, he added.
Gold prices plunged more than 13 percent between Friday's open and Monday's close in New York on worries over China's growth, according to a report by news agency AFP.
It reported that the weak China outlook hit commodity prices, with gold sinking to its lowest level since 2011 in New York after suffering its sharpest fall in 30 years.
Dealers have also been spooked by reports last week that Cyprus was preparing to liquidate some of its 14 tonnes of gold reserves to fund its part of an IMF-EU bailout plan.
But the broader view is that with inflation expectations still flat -- as both the US and Chinese data indicate -- people who buy gold as a hedge against rising prices have been driven to dump bullion, according to the AFP report.
An ounce of gold traded between $1,347.3 and $1,405.6 yesterday, according to kitco.com, a world premier retailer of precious metals.
Bangladeshi jewellery manufacturers mainly follow gold prices with kitco.com, which has offices in Montreal, New York and Hong Kong, and buy and sell a wide range of precious metal products in gold, silver, platinum, palladium and rhodium.
According to a Reuters report, consumers swooped to pick up gold in Asia after the precious metal slumped to a two-year trough yesterday.Gold shops in Hong Kong also saw a rush in jewellery and gold nugget purchases, the report said. Hong Kong, the centre for bullion trade in East Asia, is also China's main source for gold imports.
Presently, the annual demand for gold jewellery in Bangladesh is around 16 tonnes, and the annual market for gold jewellery is worth around Tk 7,000 crore.
Recycled gold jewellery is the main source for the bullion traders to make new jewellery. Manufacturers also buy gold from migrant workers and other travellers, who are allowed to bring in 200 grams of gold on every visit to Bangladesh.
Local goldsmiths buy gold from travellers and migrant workers, mainly from the Middle East.
There are nearly 30,000 jewellery shops across the country, including 1,500 in Dhaka, according to Jewellers' Samity.
Gold is measured in karats; the measure of 22 karat means that out of 24 parts, 22 parts are 99.9 percent pure and the remaining 2 parts are other metals. Twenty-two karat gold is less pure than 24 karat gold.
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