Gold prices are set to hit a new record as the Bangladesh Jewellers' Association (Bajus) decided to sell each bhori (11.664 grammes) of the precious metal at Tk 1.11 lakh from tomorrow.

The standing committee on pricing and price monitoring of Bajus took the decision at a meeting today due to a rise in pure gold prices, the association said in a statement.

The current price of each bhori of 22-carat gold ornaments is Tk 1.09 lakh.

Badal Chandra Roy, general secretary of Bajus, said prices were increasing due to the demand-supply gap. The rising US dollar price is another factor behind the hike.

In July, the price of gold crossed the Tk 100,000-mark for the first time in Bangladesh.

Gold prices hit a new milestone on November 29, when Bajus set the price per bhori at more than Tk 1.09 lakh.

Although Bangladesh does not import a significant quantity of gold, the prices are almost always linked with international fluctuations alongside volatility in the domestic market.

With an annual demand of 20 to 40 tonnes, 80 percent of the country's demand for gold is met through smuggling.

In August last year, the Bangladesh Bank made it mandatory to keep a 100 percent margin on letters of credit for gold with a view to discouraging imports and saving foreign currency.

The country's foreign currency reserve has declined by about 25 percent in the past 18 months.