Gold sale cools as prices smash previous records
Wednesday, 22 September 2010
Monira Munni
Sky-high gold prices in the international market have seriously impacted the precious metal's sales in Bangladesh, which have gone down as much as 70 per cent in recent years, market operators said.
The local consumption of gold has dropped to 15 tonnes this year, lower than 45-50 tonnes in 2005, threatening to snuff out livelihoods of an estimated 1.5 million jewlllers.
Prices of gold soared to a new high o f nearly $1284 an ounce in the global market amid speculation that it could hit $2,000 in the next decade.
Market operators have attributed the price spike to the volatile global political situation, higher cost of gold extraction and a buying spree by Chinese and Indian governments.
Most of the payments are now being made through gold instead of US dollars. Fluctuation of the dollar value also impacts on the gold price in the local market, they said.
Bangladesh Jewellers' Association (BJA), which hiked gold price earlier this month, said it will re-adjust the price to keep congruence with the international market.
The trading group is estimated to have adjusted price at least 20 times over the last three years.
"It's true gold prices have risen in the domestic market. We've done so in line with the record prices in the international market," MA Wadud, president of BJA, said, defending the hike.
The association chief noted that boosting gold reserves instead of dollar, Euro or pounds by national governments including China and India can be blamed for the current situation.
The high gold prices in the domestic market have led to a dull business over the last few years and sales of the metal have dropped by 60-70 per cent, he added.
"Gold is a sensitive item. We can't do anything except raising its price," he said, adding that if local jewllers don't up prices, domestic reserves will be emptied out in hours by "foreign" purchase.
Enayet Hossain Liton, owner of Al-Amin Jewellers said new buyers have almost deserted his outlets and sales have dived by up to 70 per cent this year.
"We now get customers who want to buy wedding ornaments," he added.
Gold is seen as a safeguard against economic uncertainty and many choose to hold reserves of gold as an alternative to foreign currencies.
"Local makers are forced to increase the prices of gold jewellery due to the growing price in the international markets," Anwar Hossain, president of Bangladesh Jewellery Manufacturers and Exporters Association, said.
Small gold jewellery makers and traders are now increasingly opting for producing silver ornaments as demand for alternatives including silver and gold-plated jewellery is growing.
Mr Hossain said many small gold traders have quit business and switched over to silver jewellery.
Now the price of 22-carat gold stands at Tk 38,024 a bhori (11.66 grams) in the local market, up from Tk 37,200 in August this year.
At the same time, 21-carat gold is selling at Tk 36,333 a bhori, rising from Tk 35,575, and 18-carat at Tk 32,367 from Tk 31667.
With gold sales across the country witnessing a fall-off, the sector's employment is also facing rough ride, reaching about 1.5 million, from two million seven years ago.
Sky-high gold prices in the international market have seriously impacted the precious metal's sales in Bangladesh, which have gone down as much as 70 per cent in recent years, market operators said.
The local consumption of gold has dropped to 15 tonnes this year, lower than 45-50 tonnes in 2005, threatening to snuff out livelihoods of an estimated 1.5 million jewlllers.
Prices of gold soared to a new high o f nearly $1284 an ounce in the global market amid speculation that it could hit $2,000 in the next decade.
Market operators have attributed the price spike to the volatile global political situation, higher cost of gold extraction and a buying spree by Chinese and Indian governments.
Most of the payments are now being made through gold instead of US dollars. Fluctuation of the dollar value also impacts on the gold price in the local market, they said.
Bangladesh Jewellers' Association (BJA), which hiked gold price earlier this month, said it will re-adjust the price to keep congruence with the international market.
The trading group is estimated to have adjusted price at least 20 times over the last three years.
"It's true gold prices have risen in the domestic market. We've done so in line with the record prices in the international market," MA Wadud, president of BJA, said, defending the hike.
The association chief noted that boosting gold reserves instead of dollar, Euro or pounds by national governments including China and India can be blamed for the current situation.
The high gold prices in the domestic market have led to a dull business over the last few years and sales of the metal have dropped by 60-70 per cent, he added.
"Gold is a sensitive item. We can't do anything except raising its price," he said, adding that if local jewllers don't up prices, domestic reserves will be emptied out in hours by "foreign" purchase.
Enayet Hossain Liton, owner of Al-Amin Jewellers said new buyers have almost deserted his outlets and sales have dived by up to 70 per cent this year.
"We now get customers who want to buy wedding ornaments," he added.
Gold is seen as a safeguard against economic uncertainty and many choose to hold reserves of gold as an alternative to foreign currencies.
"Local makers are forced to increase the prices of gold jewellery due to the growing price in the international markets," Anwar Hossain, president of Bangladesh Jewellery Manufacturers and Exporters Association, said.
Small gold jewellery makers and traders are now increasingly opting for producing silver ornaments as demand for alternatives including silver and gold-plated jewellery is growing.
Mr Hossain said many small gold traders have quit business and switched over to silver jewellery.
Now the price of 22-carat gold stands at Tk 38,024 a bhori (11.66 grams) in the local market, up from Tk 37,200 in August this year.
At the same time, 21-carat gold is selling at Tk 36,333 a bhori, rising from Tk 35,575, and 18-carat at Tk 32,367 from Tk 31667.
With gold sales across the country witnessing a fall-off, the sector's employment is also facing rough ride, reaching about 1.5 million, from two million seven years ago.