Drop in gold price fails to improve sales

Sales of gold ornaments have remained low in Bangladesh despite the reduction of the prices of the precious metal twice in February after hitting an all-time high the month before, according to jewellery traders.

On February 26, the Bangladesh Jeweller's Association (Bajus) cut the price of 22-carat gold by Tk 1,166 per bhori (about 12 grammes) in line with a declining trend in the global market.

As such, 22-carat gold ornaments now cost about Tk 91,096 per bhori, excluding the cost of added decorations such as gemstones.

The price was cut by Tk 1,167 to Tk 92,262 per bhori on February 4 after touching a historic high of Tk 93,429 on January 14.

"But sales have not increased even though the price has come down," said Vobotosh Kumar Karmokar, owner of Dhakeswari Jewellers in the Dhaka Cantonment area of the capital.

His shop now sees just two to three customers each day compared to an average of about 10 in the not too recent past.

Sales have been declining since June-July last year due to the growing cost of living and deteriorating economic situation caused by global crises, such as the ongoing Russia-Ukraine war, the US dollar shortage and subsequent higher inflation.

"The domestic gold market has been very unstable for the past year due to these reasons and so, the business situation is getting worse day by day," Karmokar added.

People usually rush to buy gold ornaments when prices enter a rising trend considering their growing value. On the other hand, sales decrease when prices fluctuate as people fear uncertainty.

Gold prices were on the uptick globally and locally from February-March 2022 due to the fluctuating price of the US dollar, leading to instability in the domestic market.

Similarly, the cost of essential commodities has risen at an unusual rate for the ongoing inflation, leading to lower demand for luxury items such as jewellery. As a result, sales of gold ornaments have come down by as much as 50 per cent.

Abdur Rahim Mollah, owner of Siddikin Jewellers at Dhaka's New Market, said most customers are waiting for further reductions in the price after hearing about the recent decline.

"People are waiting to buy gold at cheaper prices in the hope of making a profit. So, the price reductions over the past month have not affected business."

He said the business is even worse now following the recent fluctuations.

Kartik Karmakar, owner of Satarupa Jewellers, says gold prices have gone beyond the purchasing power of ordinary customers owing to the higher cost of living.

Inflation stood at 8.57 per cent in January, which is much higher compared to historic trends. It even surged to a 10-year high of 9.52 per cent.

Kartik pointed out that sales of high-end jewellery sets, such as those worn by brides, have decreased compared to the demand for simpler rings, pendants and bracelets.

Even, many people are coming to sell their old or used gold ornaments in hopes of getting good profits considering the current high price.

A salesperson at Siraj Jewellers in Dhaka's New Market said more people are coming to the shop to find the value of their old jewellery and seek out any potential offers.

MA Hannan Azad, vice-president of the Bajus, said sales have decreased due to the higher gold price.

"There are days when many stores do not get even one buyer. The sale of new gold jewellery is declining due to the rise in prices and the increased cost of living."

The price of gold fluctuated in 2022: it increased 16 times and decreased 11 times throughout the year, according to the Bajus.

May saw the highest fluctuation with the prices rising twice and falling thrice.

The price of 22-carat gold ornaments stood at an average of about Tk 75,000 per bhori at the start of 2022. It was Tk 88,413 by the end of the year, Bajus data showed.

Dewan Aminul Islam, vice-president of the Bajus, said the price of gold, like other commodities, is fixed based on demand and supply.

"When inflation rises, the price of gold goes up. Again, when there is any kind of uncertainty in the country, the sale of gold increases as people consider it as an asset."

Islam went on to say that if the price of any product is too volatile, the sales of that product automatically decrease.