The gold market of Bangladesh is witnessing high volatility in prices, raising concerns among jewellers who claim that sales this year have declined by 25 per cent to 30 per cent from what used to be in the pre-pandemic period. 

Since the beginning of 2022, gold prices were revised 23 times by Bangladesh Jeweller's Association (Bajus). The prices were raised 12 times and reduced 11 times until September -- a situation the industry people have not witnessed in recent years.

Prices of gold rose to Tk 75,000 per bhori (11.664 grammes) in the second week of February from Tk 73,133 per bhori two months ago.

The price reached Tk 84,564 on September 10, the highest in the country's history. The current rate of Tk 81,298 came about on September 26.

These fluctuations have limited sales solely to purposes that have no alternatives such as weddings, said Sreebush Roy, owner of DDamas, one of the leading brands in Bangladesh.

Others are deferring purchases with hopes prices will go down in the future, he said, adding that though jewellers hope so too, it has a negative impact on business.

The price of gold has not reached such an extent in such a short period of time in the past 20 years, Roy added.

This was echoed by Ganga Charan Malakar, chairman of Venus Jewellers. He said sales were down by 30 per cent.

However, the price rise also prompted many owners to sell their jewellery and they were higher in number this year, he said.

Jewellers say current domestic price fluctuations were a ripple effect of what was happening in international markets, increase in the exchange rate of the dollar with the taka and the Russia-Ukraine war.

The international market price per ounce was $2,052 in last February. Currently it is $1,695, said Bajus.

Domestic prices have not gone down as much as it has internationally due to rises in exchange rates of currencies, including that of the dollar, said MA Hannan Azad, chairman of the price determination and price monitoring standing committee of Bajus.

"Due to fluctuations our sales have declined 25 per cent to 30 per cent this year," he said.

Global uncertainties also raise prices and sales, added Bajus.

Any kind of global crisis, be it war or a pandemic, affect prices, said Dilip Kumar Agarwala, general secretary of Bajus and managing director of Diamond World.

"Whenever people lose confidence in the dollar, they turn to gold," he said,

"The previous wars like that in Iran, Iraq, Libya and even the economic crisis of China and America, the price of gold has increased in the international market. Now the whole of Europe is turning to gold," he said.

When various central banks buy more gold during crises, the price of gold also rises, Aggarwal said, adding that crude oil and gold were inextricably linked.

According to International Gold Council (IGC), central banks of various countries bought 37 tonnes of gold last July. Of them, Qatar alone bought 15 tonnes and eventually built up reserves of 72 tonnes.

The central bank of India bought 13 tonnes, Turkey 12 tonnes and Uzbekistan 9 tonnes. Apart from this, Kazakhstan sold 11 tonnes, according to the IGC.

There is no reliable information about the demand for gold in Bangladesh.

It is understood that the demand for gold is created in two ways -- for making jewellery and for being kept as a mode of savings or investment.

A government gold policy puts the demand at 20 tonnes to 40 tonnes.

According to commerce ministry documents, almost 80 per cent of the demand is met through smuggling and the rest by recycled gold.

Bajus said gold worth Tk 73,000 crore was smuggled in every year.

Customs statistics show that travellers brought in around five tonnes of gold on their person legally through the airports in Dhaka and Chattogram every month.

Another four tonnes are brought in under baggage rules.