Soaring prices have made gold purchasers shy away without a compelling occasion, like a wedding, as prices rose early this month for the 10th time in a year.
Jewellery manufacturers said they raised the prices to adjust to those on the international market.
The price per bhori (11.66 grams) of 22-carat gold stands at Tk 41,220, up 6 percent from October. Buyers prefer 22-carat gold for its purity — 96 percent.
The price of lesser purities rose about 10 percent. The 21-carat price is now Tk 33,375, while 18-carat gold is Tk 30,000 on the local market.
Gold prices rose by more than Tk 10,000 per bhori this year, said the jewellery manufacturers.
Unlike the neighbouring countries, where gold prices are not adjusted regularly, local jewellers periodically revise prices to align with the global market.
Jewellers said soaring prices have eroded demand, as sales of gold jewellery are now half the level of three years ago.
On the international market, gold powered to a record high on Friday, with investors pouring more cash into the market, unnerved by economic worries. By late Friday on the London Bullion Market, gold rose to $1,355 an ounce at the late fixing from $1,342.50 a week earlier.
“The recent rise in the gold prices on the international market has compelled us to increase the prices,” said Anwar Hossain, president of Bangladesh Jewellery Manufacturers and Exporters Association. “We have adjusted the prices to the global market.
“One of the major reasons is that we collect a major portion of gold from travellers and migrant workers, mainly from the Middle East,” he said. “They buy at international market prices and sell in the local market at high prices.
“Another reason is if we don’t adjust the prices in line with the international market, a section of unscrupulous traders would smuggle gold to the countries where the prices are higher.”
However, he said the hike would dampen consumption further, which is alarming for the local jewellers.
“Now, except for weddings, most people don’t buy gold ornaments,” he said.
This year’s demand for gold jewellery declined to about 11 tonnes from more than 45 tonnes in 2004, according to the association’s data. The annual market for gold jewellery is worth around Tk 3,500 crore.
Recycled gold jewellery is the main source for the bullion to make new jewellery. The manufacturers also buy gold from migrant workers and other travellers, who are allowed to bring in 200 grams of gold per visit to Bangladesh.
There are nearly 20,000 jewellery shops across the country, including 1,200 in Dhaka, the association said.
The rising price of gold has increased demand for alternatives, such as diamonds and gold-plated jewellery.
“The demand for diamond jewellery is rising fast because the prices are more tolerable than those of gold ornaments,” said MA Wadud Khan, president of Bangladesh Jewellers’ Samity.
The value of sales doubled to more than Tk 200 crore in 2009 compared to a year ago.
Gold is also used in industry. Its use as a conductor in many electronic items, such as mobile phones and computer keyboards fluctuates less, said Hossain.
