Bangladesh's Gold Rally Snaps as BAJUS Cuts Rates by Tk1,633 a Bhori

Gold in Bangladesh has given back a chunk of its two-day rally. The Bangladesh Jewellers Association, known as BAJUS, cut the price of 22-carat gold by Tk1,633 a bhori on Friday, pulling the benchmark rate down to Tk223,074. It is the market's fifth price change in a little over a week, and it leaves gold almost exactly where it stood on Wednesday morning, before a brief two-day bounce.

• 22-carat gold fell Tk1,633 a bhori to Tk223,074, effective from 10am on Friday, October 30.
• The cut wipes out most of a Tk3,849 rally built up over the two previous sessions.
• International spot gold slid to $3,995.42 an ounce on Friday, its lowest level since mid July, according to Reuters.
• 22-carat hallmarked silver was cut too, down Tk175 to Tk3,674 a bhori.

What BAJUS changed on Friday

Under the new rates, a bhori of 22-carat hallmarked gold, the grade most commonly bought for jewellery in Bangladesh, costs Tk223,074, or Tk19,125 a gram. The 21-carat rate fell by Tk1,575 to Tk213,043 a bhori, 18-carat gold dropped Tk1,341 to Tk182,950, and gold sold by the traditional method fell Tk1,108 to Tk149,474. BAJUS also trimmed its silver rates, cutting 22-carat hallmarked silver by Tk175 to Tk3,674 a bhori, with the other silver grades easing by similar margins.

A rally that lasted exactly two days

The cut comes right after gold's best run of the month. BAJUS raised the 22-carat rate by Tk2,216 a bhori on Wednesday and by a further Tk1,633 on Thursday, a combined gain of Tk3,849 in two sessions, as the price tried to claw back some of October's steep slide. Friday's Tk1,633 cut takes back almost exactly Thursday's gain, leaving the price at Tk223,074, the same level it reached on Wednesday. Anyone who bought gold at Thursday's peak of Tk224,707 is holding metal worth less just a day later.

Why the price keeps swinging

BAJUS resets its rates most days to track the price of pure, or "tejabi," gold in the local market, which in turn follows international bullion prices and the taka's exchange rate against the dollar. Friday's cut followed a drop in global gold prices, which fell about 3.8 percent over the course of October, according to Reuters data cited in local reporting. Spot gold's slide to a three and a half month low has been pinned on stronger than expected US economic growth numbers, persistent inflation readings, and a market that has pushed back its bets on how soon and how far the US Federal Reserve will cut interest rates. When US rates are expected to stay higher for longer, gold, which pays no interest, tends to lose some of its appeal to investors, and its dollar price falls. That global move flows through to BAJUS rates within a day or two, since Bangladesh imports essentially all of its gold.

What it means for you

For Bangladeshi households, the lesson from this week is less about which direction gold is heading and more about how unpredictable it has become. Four straight cuts earlier in October had pushed the 22-carat rate down to roughly Tk220,858 by Tuesday, its lowest point of the month, before the two-day bounce and Friday's partial reversal. Anyone planning a wedding purchase, a zakat payment in gold, or simply timing the sale of old jewellery is better off checking the rate on the day itself rather than relying on what it was two or three days earlier. BD Financial Review's own gold price tracker updates with every BAJUS revision, and the same volatility is worth keeping in mind for anyone using the zakat calculator to value gold holdings this season, since a swing of even one or two percent can change the taka value of a zakat-eligible gold holding by a meaningful amount.

The wider picture

Despite Friday's pullback, 22-carat gold in Bangladesh remains far above where it traded at the start of the year, and BAJUS rates have moved in both directions on a near weekly basis since September. Jewellers in Dhaka's Tanti Bazar and New Market have said the constant revisions make it hard to hold stock with any confidence, since a shop can be left holding gold bought at a higher rate than the one it is forced to sell at days later. With the Federal Reserve's next policy decisions still ahead and global traders watching every US data release closely, more swings in either direction look likely before the price settles into a clearer trend.