Gold prices reach fever pitch, yet demand remains steady in Bangladesh

The global financial landscape is currently witnessing a phenomenon as old as civilisation itself: a rush towards gold. 

Prices for the yellow metal have scaled unprecedented peaks worldwide. This rally is fueled by a potent cocktail of economic anxieties: persistent geopolitical tensions, concerns over the trajectory of the US dollar, volatile stock markets, and aggressive purchasing by central banks seeking to diversify reserves.

As uncertainty clouds the global economic outlook, gold is reaffirming its age-old status as the ultimate "safe haven" asset for investors seeking stability when traditional investments appear shaky.

Smuggling significantly impacts Bangladesh's gold market. High import taxes have led to an estimated 80% of the country's 20-40 tonnes annual gold demand being met through illicit channels, with the remaining 20% from recycled gold.

Yet soaring gold prices in Bangladesh, nearing Tk2 lakh per bhori, have not deterred its popularity. Cultural traditions ensure gold remains a staple for weddings, festivals, and heirlooms, while economic challenges—high inflation, a weakening taka, and low savings returns—have elevated its status as a safe and profitable investment. 

Smuggling, driven by high taxes, further complicates the market, yet demand endures. As global uncertainties persist, gold's dual role as a cultural treasure and financial asset will likely keep it at the heart of Bangladeshi society, balancing sentiment with strategy

Soaring prices

In Bangladesh, the price of 22-karat gold, the standard for jewellery, has reached Tk177,887 per bhori (11.664 grams) as of 23 April 2025, according to the Bangladesh Jewellers Association (BAJUS) (19th Hike in Gold Prices). 

This marks a significant increase from Tk167,833 per bhori just days earlier on 20 April 2025, reflecting frequent price adjustments. The local price often exceeds global equivalents, with a calculated global 22-karat gold price of approximately Tk139,725 per bhori.

Bangladesh's gold market operates in a gray zone. Officially, no gold has been imported in 2024-2025, yet annual demand ranges between 20-40 tonnes. Customs data reveals a thriving smuggling network: over 31 tonnes entered via "baggage rules" in 2023, while seizures of smuggled gold exceeded Tk100 crore. 

This illicit supply chain, coupled with opaque pricing by the Bangladesh Jewellers' Association (BAJUS), exacerbates price distortions.

BAJUS has raised gold prices multiple times in 2025 alone, attributing hikes to global trends. However, critics argue the association's pricing model lacks transparency, with arbitrary markups for VAT (5%) and labour (6%) inflating retail prices beyond global benchmarks. 

In 2002, gold prices in Bangladesh were reportedly around Tk10,000 per bhori. In contrast, the global average gold price in 2002 was approximately $342.75 per troy ounce. 

Assuming an exchange rate of around Tk55/USD, this translates to roughly Tk6,473 per bhori for 22-karat gold, suggesting local prices included premiums for jewellery making or market factors. The leap from Tk10,000 to Tk177,887 represents a dramatic escalation, far outpacing inflation and highlighting both global and local influences.

Drivers of gold demand

Cultural and ceremonial Significance

Gold is deeply embedded in Bangladeshi culture, symbolising wealth, status, and auspiciousness. It is a staple in weddings, where brides are adorned with gold jewellery, and during festivals like Eid, where gold gifts are exchanged. 

Families often preserve gold ornaments as heirlooms, passing them down through generations, which blends sentimental value with financial security. 

This cultural anchor ensures a baseline demand, as gold purchases are often non-negotiable for significant life events, regardless of price.

"I had saved up for a long time and thought I would be able to afford around 6-7 bhoris of gold for my wedding. But with prices so high, I won't be able to gift everything I wanted to gift my wife for the wedding. But I have to buy gold anyway, as it is a big part of our wedding rituals. No matter, we have to buy at least some gold," said Ariful Islam, a Banasree resident who is getting married this summer.

Economic turbulence

Bangladesh's economy has faced challenges, including a weakening taka and high inflation, recorded at 11.38% in November 2024. Traditional savings tools, such as certificates and bank deposits, offer returns of 11.76% to 11.52%, which barely outpace inflation (Gold as Investment). 

In contrast, gold has demonstrated superior profitability, making it a safe haven for investors seeking to hedge against economic uncertainty.

Profitability

Gold's investment appeal is evident in its short-term and long-term returns. A Tk2 lakh investment can yield Tk10,000 profit per bhori in 2-3 weeks, and holding gold for a year can result in even higher gains due to consistent price increases. 

From June 2022 to 2024, gold prices rose from Tk77,216 to Tk138,288 per bhori, peaking at Tk143,000 in October 2023. This profitability, coupled with gold's high liquidity—its ease of cash conversion—makes it a preferred choice for middle and upper-middle-income groups.

Global influences

Global factors, such as trade wars, a weakening US dollar, and stock market volatility, have driven gold prices upward, influencing local markets. 

The Nixon Shock of 1971, which ended the gold standard, marked a turning point in gold's role as a market-driven asset, and recent political events, like US policy uncertainties, have further boosted demand.

Investment trends

While cultural purchases remain significant, there is a growing trend of viewing gold as a financial asset. Investors are drawn to its resilience during economic downturns and its ability to offer gains amidst price pressures or geopolitical risks. 

The Bangladesh Jewellers Association reports that the country imports 18-36 tons of gold annually, reflecting robust demand driven by both tradition and investment motives. The Gold Policy of 2018 has also stabilised the market by regulating imports and curbing smuggling, making gold a more accessible investment.

Saima Haque Bidisha, Professor at the Economics Department of Dhaka University, said in a recent interview that investing in gold is very popular among common people in Bangladesh. She said, "The main reason for this is that people's confidence in the capital market is very low due to its uncertainty in Bangladesh. That is why ordinary people prefer investing in gold." 

She further added, "There is another major reason for ordinary investors behind the attraction towards gold. People from the low-income group think that if the price of gold goes up or down, there is no big difference. As a result, it is risk-free."

Smuggling remains a big issue

Smuggling significantly impacts Bangladesh's gold market. High import taxes have led to an estimated 80% of the country's 20-40 tonnes annual gold demand being met through illicit channels, with the remaining 20% from recycled gold. 

This smuggling, valued at Tk73,000 crore annually, distorts local supply and contributes to prices exceeding global rates. Despite this, demand persists, suggesting that cultural and economic drivers outweigh price concerns.

According to Saima Haque Bidisha, "If we see that the government is brought to pay a fixed price for the import of gold through legal channels, then the government should be encouraged. That is, the government needs to take what steps can be taken to encourage the matter to be brought on the legal path."

"There is almost no transparency in this place. Therefore, it is necessary to give a little more flexible terms and conditions to bring it in a legal way," she added.