After four consecutive years of gains, gold prices are now falling. Compared with the last week of January this year, the price of 22-carat gold has dropped by more than Tk66,000 per bhori (11.664 grams), or 23%. Nearly Tk10,000 has been wiped off the price in just the past week.
Gold prices began rising during the coronavirus pandemic in 2020. The pace accelerated towards the end of 2021, making the metal increasingly unaffordable even for middle-income people.
On 28 January this year, the price of 22-carat gold reached Tk286,000 per bhori in the domestic market. At the time, there was speculation that it would cross Tk300,000. But prices began falling soon afterwards.
On Friday, 22-carat gold was priced at Tk219,808 per bhori. This represents a fall of Tk66,193 in less than nine months, a trend not seen since 2017.
Legal gold imports into Bangladesh are extremely limited. The Bangladesh Jewellers Association (Bajus) sets prices by taking into account international market rates, the dollar exchange rate, import costs and other expenses.
Dewan Aminul Islam Shaheen, chairman of Bajus’s Standing Committee on Pricing and Price Monitoring, told TIMES, “During wars or any kind of global uncertainty, central banks in different countries and individuals tend to increase their gold holdings. Prices fall when the global economy becomes somewhat stable or central banks reduce their gold reserves. Prices in the domestic market also rise and fall depending on the dollar exchange rate.”
He said falling gold prices were a relief for jewellery traders. “What we need is a price that is within consumers’ purchasing capacity. That helps our business.”
However, he said jewellery purchases in Bangladesh did not follow the usual pattern of demand falling when prices rise.
“When prices fall, buyers wait for them to fall further. But when prices start rising, they increase their purchases out of fear that prices will go even higher,” he said.
Khondaker Golam Moazzem, president of Knowledge Hub Institute Trust, told TIMES, “There is not enough information and data available about Bangladesh’s gold market. Bangladesh is also used as a transit route in many cases. We can see the impact of those activities on market prices as well.”
In 2017, the price of 22-carat gold was slightly above Tk49,000 per bhori. It fell by Tk2,000 the following year, then rose sharply to nearly Tk60,000. In 2020, it reached Tk74,000.
Prices fell to Tk58,000 in 2021 during the coronavirus pandemic but began rising again as lockdown restrictions eased. After Russia launched its attack on Ukraine in February 2022, gold prices climbed rapidly amid the economic crisis.
The price crossed Tk87,000 per bhori that year, rose to Tk111,000 the following year and reached Tk128,000 in 2024. It climbed to nearly Tk227,000 the year after.
How much does gold cost in other countries?
According to live gold rates published by Dubai-based Khaleej Times, gold was priced at 450.50 dirhams per gram in Dubai on Friday afternoon. This put the price at 5,205 dirhams per bhori, equivalent to Tk176,775 in Bangladeshi currency.
According to the India Bullion and Jewellers Association (IBJA), one gram of 22-carat gold in India cost 13,164 rupees, equivalent to Tk17,425.
The price per bhori was therefore Tk203,285. Adding 3% sales tax brings it to Tk209,384 – Tk10,000 less than the price in Bangladesh.
Dewan Aminul said, “The price of gold in Bangladesh cannot be understood directly by looking at international market prices. The dollar exchange rate is also important. There is a difference between bank rates and open-market rates. In addition, the cost of bringing gold into the country and the profits of wholesalers and retailers are added. As a result, prices in Bangladesh may be higher than those in the international market.”
No commercial imports, recycled gold is the main source of supply
The main framework for commercial gold imports into Bangladesh is the “Gold Policy 2018”, amended three years later. Under the policy, 19 entities were licensed as distributors, including 18 business organisations and one bank.
Several entities initially imported a few consignments but later lost interest because of the foreign currency shortage, delays in obtaining permission and VAT. There is now no record of any entity importing gold.
Aminul said changes to the existing process were necessary to make commercial imports viable.
“There is no guarantee that international market prices will remain the same tomorrow if we open a letter of credit today. So we need the facility of spot LCs. Alternatively, arrangements should be made to open an LC and bring gold into the country within three to four days,” he said.
“The Bangladesh Bank could retain a profit of two or three dollars per ounce under this arrangement. This would reduce dependence on lengthy procedures for gold imports and create an opportunity to buy gold through legal channels,” Aminul added.
Traders said gold enters the country mainly through passengers returning from abroad. A passenger can bring up to 100 grams of gold jewellery from overseas each year without paying duty.
A passenger can also bring in one gold bar a year by paying customs duty of Tk5,000 per bhori. One bar is equivalent to 10 bhori.
Old gold jewellery is recycled as people sell or exchange their pieces to buy new ones. Tantibazar in Dhaka is the largest centre for collecting and refining old gold, which jewellery traders buy from the poddars there.
How are prices determined?
Bajus adjusts domestic rates in response to changes in the global market. The wholesale market centred on Tantibazar also plays a role, with the Poddar Association setting gold prices every day.
Zainal Abedin Khokon, general secretary of the association, told TIMES: “A trader may have old gold bought at Tk500 per bhori, while they may also have gold bought at Tk260,000 per bhori. At the end of the day, the average value of the stock and the sales figures have to be taken into consideration.”
A profit of Tk5,000 per bhori for jewellery traders is added to the wholesale price. VAT and making charges are added when customers buy jewellery from shops.
Bangladesh as a gold smuggling route
Traders said Bangladesh is used as a transit route for gold smuggling. They cited seizures at airports and recoveries in the Jashore-Benapole border area, Chuadanga and other locations along the Indian border.
Dewan Aminul said, “We have tried to explain to the government that the gold brought in by expatriate Bangladeshis is one kind of flow. On the other hand, the gold brought in through smuggling is often not destined for Bangladesh.”
He said excessive barriers to legal gold imports increased the risk of encouraging illegal trade.
Zainal Abedin of the Poddar Association said, “The consignments of 10kg or 20kg seized at ports or elsewhere are not ours. They are Indian. Bangladesh is essentially being used as a route.”
Potential for gold jewellery exports
Dewan Aminul said that Bangladesh has skilled gold artisans whose jewellery is in demand in international markets. However, many craftspeople are moving to cities such as Kolkata and Mumbai because of a lack of facilities and opportunities.
He said simplifying gold imports could create opportunities for Bangladesh to export gold jewellery within the next five years.
Bajus has discussed the issue with the commerce minister and proposed changes to the gold import policy.
