News Analysis: High price of gold imperils jewelry industry in Bangladesh

2013-01-01 06:29:37 GMT2013-01-01 14:29:37(Beijing Time)  Xinhua English

by Syed Zainul Abedin, Naim-Ul-Karim

DHAKA, Jan. 1 (Xinhua) -- Like many women in South Asian and Middle Eastern countries, gold is the most favorite choice of Bangladeshi women when it comes to jewelry.

It used to be that a Bangladeshi woman does not feel complete when she has no gold jewelry either brand name or traditionally made ones.

But nowadays Bangladeshi women no longer opt for pieces of jewelry made of gold since the price of gold has gone up considerably. Now they just settle for metal-made or clay-made body adornments.

Industry sources are saying that due to an unprecedented price hike, the demand for gold jewelry in Bangladesh has declined and some gold merchants have been forced to close shop.

They say that the price of gold in the country has gone up along with that in the international market as soaring inflation in Bangladesh and elsewhere in the world, volatility in global foreign exchange market, weakening U.S. dollar and oil and commodity price hike led more and more investors to trade in gold rather than in other commodities.

Industry insiders claim that sales of gold jewelry have slumped by about 50 percent in recent times as the demand for ornament has declined in line with the soaring prices of the precious metal.

A decade ago the price of gold was 15,000 taka (about 187 U.S. dollars) per bhori (11.664 grams) but now the price has gone up to 60,000 taka (about 750 U.S. dollars) per bhori in local market, resulting in drastic drop in sales.

"We're now passing a crucial time as demand for gold jewelry dropped by about 50 percent," Dilip Roy, president of Bangladesh Jewelers' Samity (association), told Xinhua Sunday.

"I've never seen such a grim situation in the past 20 years in my gold business," Roy said.

According to Roy, about 3,000 jewelry shops across the country have already been closed, putting about 30,000 to 45,000 people out of job.

"About 100,000 goldsmiths and artisans have also been unemployed in recent times," Roy said, adding that about 1 million goldsmiths and artisans in the country's about 60,000 jewelry shops are now really worried about their future.

Against this backdrop, Roy said, more and more artisans are either changing their professions or leaving Bangladesh in search of work in India, Dubai and Singapore.

Roy also stressed the need for a national gold policy, which is now on under-formulation stage, to help the jewelry business in coping up with present challenges and to make it a major export- oriented sector.

According to Roy, there is market for jewelry products from Bangladesh in the Gulf states as well as in Asian countries like Singapore, Thailand and Malaysia.

"We are suffering the worst time in our business. Because of the high price, people are no longer interested in buying gold ornaments," said Pradeep Das, manager of a jewelry shop in Dhaka's downtown Azimpur area.

Das said that people now buy the cheaper gold-plated or silver ornaments.

In Bangladesh, a country of 153 million people, gold is the main jewelry that women use for social gatherings such as weddings or birthday parties.

Mr. Sagar, proprietor of a small gold shop, said he fears that the rising price of gold could put him out of business.

Rajbongshi Das, a 32-year-old goldsmith, said he might be forced to look for another job as the demand for hand-made gold ornaments is declining every day.

"I have been a goldsmith for 12 years now. But during the past few years, I have been getting fewer orders. It is now hard for me to support my three-member family," Das said.

Another goldsmith Ripon Kumar Saha also expressed his disappointment about his future prospect in this profession as the use of cutting edge technology is slowly edging them out of business.

"Now, most of the ornaments are being made by hi-tech machinery. This is another threat to us," Shah said.

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