Sales fall as local gold prices raised

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FE Report
Gold prices in the local market have hit a new high with the 21-carat guinea gold selling at Tk 27,993 and 22-carat at Tk 29,334 a bhori leaving an adverse impact on overall sales ahead of the ensuing Eid festival.
Only four months ago the 21-carat gold was selling at Tk 26,100 and 22-carat at Tk 27,300 a bhori.
Bangladesh Jewellery Association (BJA) re-fixed the new prices of gold for the local market in line with the surging prices in the international market.
"Prices of the precious metal have risen in the domestic market, as the international prices have also hit record highs," MA Wadud, BJA president, told the FE.
In the international market, the gold price surged to $1000 an ounce, the highest in 25 years, he added.
"The gold prices are rising continuously as many countries, especially Gulf states, have resorted to holding reserves of gold instead of US dollars," the president said.
The high gold prices in the domestic market have led to a dull business over the last few years, he added.
Local industry insiders said gold is always seen as a safeguard against any kind of economic uncertainty. Many choose to hold reserve of gold as an alternative to the US dollar, BJA sources said.
The jewellers have recorded a significant fall in their sales because of the high rates. Any further gold price hike would just damage the jewellery business, the sources pointed out.
According to them, only those customers, who are required to hold any wedding ceremony of their family members, now come to the market to buy jewellery items. Still they try to purchase as minimum as possible as the present gold rates are beyond the reach of the middle-income families.
According to the sources, the rising oil price and appreciation of the US dollar have contributed to the gold price hike. As the metal is the only existing asset, which has proved profitable over the last decade, more buying spree is not unexpected.
BJA sources said most of the payments are now being made through gold instead of US dollars due to the scarcity of the US dollar in the local kerb market. Fluctuation of the dollar value also impacts on the gold price in the local market.
The country has about 5,000 jewellery shops, which sell readymade ornaments, and about 10,000 shops that make ornaments on order from customers.
The total number of workers involved with the jewellery business decreased to 1.5 million from 2.0 million in 2002-03 due to the volatile domestic market.