Jago News Economy Why gold price is high in Bangladesh in South Asia

Why gold price is high in Bangladesh in South Asia

জাগো জবস নিউজ ডেস্ক

There has been a continuous rise in prices in the gold market for the last three years in the country. This growth trend, which started in mid-2022, has now reached its peak. This surge in prices is not just recent. An analysis of two decades of data shows that in 2000, the price of 22 carat gold was only Rs 6,900 per bar. After a decade in 2010, it increased to 42,165 taka. In 2020, the price touched around 70 thousand rupees, and in 2023, the price of gold crossed one lakh rupees for the first time. Now the house price has crossed nearly two hundred lakhs – which is a historical record in the country's gold market. On Tuesday (October 14), the price of 22 carat gold (11.664 grams) has been increased to Tk 2 lakh 16 thousand 332.

On Monday (October 13), the price of a 22 carat gold bar was Tk 2 lakh 13 thousand 719. In other words, a new gold record was created in just 24 hours. Not only has the price of this product increased in the country, but the price of gold in the international market has now crossed the highest level in history. Gold rose to $4,99.55 an ounce in the spot market at 10:50 a.m. US local time (1450 GMT) on Monday (October 13), after briefly touching $4,103.58.

Why is the price increasing?

Analysts say investors are increasingly turning to gold due to geopolitical instability, a global economic slowdown, rising import tariffs and international uncertainty. As a safe investment medium, the demand for gold is increasing in the global market, which has a direct impact on the Bangladeshi market as well.

Impact on the market

Bangladesh Jewelers Association (BAJUS) Standing Committee Chairman Masudur Rahman feels that if the current trend continues, the prices may increase further. In his words, “The future price of gold is completely dependent on the global market and the gold reserve policy of central banks. It is not unusual for the price to increase in the domestic market when demand increases in the international market.”

However, as a result, common buyers are in trouble. Masudur Rahman said, “The price of gold is now beyond the reach of many people. Many artisans are becoming unemployed due to reduced sales.”

Rising gold prices in the international market have not only affected Bangladesh, but also set new records in South Asian markets.

This surge in gold prices has affected almost all South Asian countries—especially the markets of Bangladesh, India, Pakistan, Sri Lanka, Nepal, Bhutan and the Maldives.

Bangladesh: New history at record prices

Gold is being sold at the highest price in Bangladesh market so far. In the latest price announced by Bangladesh Jewelers Association (BAJUS), the price of 22 carat gold stands at Tk 2 lakh 16 thousand 332. And the price of gold per gram is 18 thousand 547 taka. Currently 1 US dollar is equal to about 121 taka 80 paisa.

According to market analysts, the devaluation of the currency and the increase in the price of acidic gold in the international market are the two reasons why the price of gold in the country has increased continuously.

In this context, Consumers Association of Bangladesh (CAB) Senior Vice President SM Najer Hossain said that the country's gold business is now largely under the control of corporate groups. As these powerful traders control the market, gold prices are skyrocketing, leaving ordinary buyers suffering.

He told Bengali Tribune, “Buying gold for weddings or other social events has now become a big burden for many families. Those who used to use gold as a hobby, are now unable to buy it. It is basically nothing but a form of manipulation.”

He further said, “This situation has arisen because the gold market has gone beyond the effective control of the government. Earlier there were complaints of gold smuggling in neighboring countries, but now the bigger concern is that corporate traders within the country are influencing the market.”

Najer Hossain thinks that there are already many loopholes and irregularities in the gold business. Added to that, the market has become more volatile due to the influence of corporate groups.

He said, “Government should enact appropriate laws and policies to regulate the gold trade. This will protect consumer interests and bring transparency to the market.”

Speaking to gold traders, it is said that the market is now in such a state that it has become virtually impossible for the middle and lower middle class to buy gold. Buying gold, once a part of family culture for weddings, festivals or as a means of securing future savings, has now become a luxury item.

A jeweler owner in Dhaka's New Market area said, “Earlier, someone used to come to the store every day to make jewelry or exchange old jewelry. Now many people come only to look, not to buy. Customers have decreased, but prices are increasing.”

Gobind Halder, a veteran gold merchant of Old Dhaka's traditional Tantibazar, has been involved in this profession for almost five decades. He reminisced and said, “Before independence, the price of Guinean gold was only one and a half hundred rupees. Even then people said the price was high. But now the situation has become more difficult.”

Sagar Sarkar, in charge of Diamond World's Gulshan branch, said that usually when the price of gold increases, the sales increase a little. Because people assume that prices will increase. But this time the opposite picture is seen. “Many buyers can no longer afford to buy gold,” he said.

Comparative price in India is slightly lower

Indian gold prices have increased, but slightly less than Bangladesh. The price of 24 carat solid gold stood at INR 12,453 per gram in the Mumbai market on Wednesday (Oct 15), which is about Tk 15,916 in Bangladeshi currency. The price of 1 bhari (11.66 grams) of gold stands at around Tk 1,85,580.

22 carat hallmark gold is slightly less expensive. The price per village is around INR 11,860, which is between INR 15,900-15,920 in Bangladeshi currency.

According to analysts, the biggest impact on prices in India's huge gold market is the central bank's import duties and a surge in demand during the festive season. Due to this, the prices in the Indian market are relatively stable while the gold prices in Bangladesh are slightly higher.

Gold traders say that the price of gold naturally fluctuates when the demand for festivals and weddings increases. However, due to the low prices in the Indian market, it is relatively affordable for Bangladeshi buyers.

In Pakistan, the price has doubled due to the depreciation of the rupee

The sharp depreciation of Pakistan's currency, the rupee, has pushed up the price of gold in the local market. Last Friday (October 10), the best quality gold, i.e. 1 gram of 24 carat gold, was priced at 36,788 Pakistani taka, which is about 15,870 taka in Bangladeshi currency. It costs around Rs 1,85,000 per load. After two days of market closure, prices rose slightly on Monday to 37,021 Pakistani rupees per gram, about 15,900 rupees in Bangladeshi currency and about 1,85,500 rupees per bar.

Gold prices of other carats have also increased in the country. 22 carats cost around Tk 14,500 per gram and around Tk 1,69,000 per lot in Bangladeshi currency. The price of 21 carats is around Rs 13,900 per gram and around Rs 1,62,000 per load. The price for 18 carats has fallen to Rs 12,000 per gram and around Rs 1,40,000 per lot.

How much in Sri Lanka?

Sri Lanka's economy has turned around a bit after the IMF's assistance, but gold prices in the Colombo market are slightly lower than in Bangladesh. On Monday (October 14), 22 carat gold was sold at 40,620 Sri Lankan rupees per gram. Currently 1 US dollar is equal to 302.85 rupees in the country. If calculated in Bangladeshi taka, the price of one gold is about 1 lakh 90 thousand 500 taka.

According to experts, even after the debt crisis has been overcome, public confidence in gold has not diminished. Gold is still Sri Lanka's symbol of safe investment amid an uncertain future and a crisis in savings options.

What is the price of 22 carat gold in Nepal?

The price of 22 carat gold in Nepal market is currently around 10,892 Nepalese rupees per gram, which is around 9,366 Tk in Bangladeshi currency as per current exchange rate calculation.

One bhari (11.66 grams) of gold costs around 1,26,900 in Nepali rupees—which works out to around 1,09,150 in Bangladeshi taka.

Analysts feel that Nepal's gold market remains relatively stable mainly due to the festive season and investment. However, the price may vary slightly due to fluctuations in international gold prices and Nepalese rupee exchange rates.

Although the gold market in Bhutan is small, buyers are aware

As Bhutan's currency 'Nultram' is exchanged at par with the Indian rupee, the country's gold prices also move in line with neighboring India. At present, the price of 22 carat gold per gram in Thimpur market stands at 10,898 nultrams, which is about 14,900 rupees in Bangladeshi currency. Based on this, the price per load reached around 1 lakh 73 thousand 793 taka in Bangladeshi currency.

Although the market size is small, demand for gold in Bhutan is still stable. Trading in gold remains an integral part of the country's cultural heritage, particularly for Buddhist religious festivals, weddings and family customs. Market analysts say this demand is helping to maintain stable gold prices despite a limited market.

Price status dependent on tourism income in Maldives

The gold market in the tourism-dependent Maldives is also bullish. In the capital, Male, 22 carat gold is being sold at 1,885 Maldivian Rufiyaa per gram. The value of the currency in the country is currently 15.4 rupiah equal to 1 dollar, which is about 1 lakh 76 thousand taka in Bangladeshi taka.

According to analysts, foreign currency inflows from tourism in the Maldives are helping to stabilize the market, but the influence of the global market is also evident here.

Exchange rate is the key regulator

According to analysts, the biggest influence on the South Asian gold market is the local currency exchange rate. The Indian rupee is relatively stable against the taka, but the Pakistani rupee and the Sri Lankan rupee have weakened significantly. Depreciation of the currency against the dollar increases import costs, which is directly reflected in gold prices.

The dollar exchange rate also has a direct impact on the country's gold purchases. The exchange rate of one dollar is now around 121.80 rupees in Bangladesh, 87.78 rupees in Indian market, 283.58 rupees in Pakistan, 142.11 rupees in Nepal, 86.58 rupees in Bhutan, 302 rupees in Sri Lanka and 15.41 rupees in Maldives. That is, the variation in currency value is affecting the purchasing power of gold.

Analysts say gold prices may become more volatile due to fluctuations in international markets and changes in local currency values. Gold market in Bangladesh is peaking due to festive and wedding season demand and increased buying trend for investment. Experts advise buyers to be cautious, monitor the market and invest at the right time.

Economic analyst Dr. Mahbubur Rahman told Bangla Tribune, “In countries where the dollar crisis or currency devaluation is high, gold prices are relatively high. This is a kind of 'macroeconomic reflection'.”

Economists say, all in all, the price of gold has created a new reality in the South Asian market. Although each country's economy, monetary policy, and international market pressures are different, the overall picture is the same—gold is more expensive and in demand than ever before.

Although the price is highest in Bangladesh, investors see it not only as a luxury metal, but as a safe asset. As long as there is instability in the global market, there is a high risk that the rise of gold will continue in the South Asian market.

 SourceOwn Reporter

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