Shining gold saddens traders

A woman tries a necklace at a jewellery shop at Baitul Mukarram market in Dhaka. The recent price hike of gold has dealt a blow both to the traders and buyers.Photo: STAR

Gold prices increased for the seventh time in September since January this year, sending a chill pang to local jewellers amid declining local demand in the past few years due mainly to its price spiral.
The latest price hike came as the precious metal crossed a $1,000 mark in London bullion market recently. However the price is now hovering around $990 per ounce in the international market.
Now the price of 22-carat gold stands at Tk 29,335 a bhori (11.66 grams) in the local market, a rise from Tk 25,194 in January.
At the same time, 21-carat gold is selling at Tk 27,994 a bhori, rising from Tk 23,000, and 18-carat at Tk 24,786 from Tk 21,286 in January.
Gold jewellery sales dropped by more than 50 percent in the past three years.
The local consumption has declined to 10-12 tonnes a year now from 45-50 tonnes five years back, and so the annual turnover of the jewellers has also marked a fall.
Presently, the annual market size of gold jewellery is around Tk 3,000 crore, said the industry people.
Small gold jewellery makers and traders now increasingly opt for producing silver jewellery, as demand for alternatives, including silver and gold-plated jewellery, is growing fast, said industry people.
They said price hike in the international market has impacted the local market.
Industry insiders said as the dollar has lost its previous strong foothold, the demand for gold, now considered as a safe haven, is gradually increasing, and so is its price.
Anwar Hossain, president of Bangladesh Jewellery Manufacturers and Exporters Association, said local makers are forced to increase the prices of gold jewellery due to the growing price in the international markets.
“When gold price marks a rise in the global market, all the member countries of World Gold Council have to adjust the price, as we all have to buy gold from international markets,” Hossain said.
“Apart from used gold, the main source of the metal for locally made jewellery is the migrant workers, who are allowed to bring 200 grams of gold each time they come to Bangladesh."
Migrant workers, mainly from the Middle East, and travellers buy gold at international prices and sell for more in the local market, which is another reason for the price hike, Hossain said.
“Also, we have to raise the price to safeguard the local industry. If we do not increase the price of local gold, it may be smuggled to neighboring countries, where the price is higher,” explained the association chief.
“Foreign traders will purchase gold at lower prices from us and sell at higher rates in their own countries,” he said.
However, Hossain said the price of gold jewellery in Bangladesh is lower so far than that in the neighboring countries.
He said around 20 percent small manufacturers and traders of the association have quit business and taken to making silver jewellery.
Simultaneously, consumers' purchasing capacity and the number of buyers have been constantly declining because of increasing prices.
“The price of gold jewellery has risen beyond the reach of the common people. Except for weddings, people, especially the middle class, do not buy gold jewellery,” said Setara Gujnavi, who recently came to purchase jewellery at Baitul Mukarram market for her daughter's wedding.
“We are cautious about choosing jewellery because we have to strike a balance between the amount of gold and design," she said. “Other than weddings, we cannot even think of buying gold jewellery as a gift item.”
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