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Gold Price Drops in The World Market, Lowest in Two Months
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12 Nov 2024, 17:53
Photo: Collected
Gold prices dipped 1% to their lowest levels in nearly two months on Tuesday (November 12) as the US dollar soared ahead of economic data and comments from Federal Reserve officials that could shed light on the interest-rate path under the Trump administration.
Spot gold was down 0.9% at $2,596.16 per ounce which is almost 3,10,809 in Bangladeshi taka, after dropping 1% to hit its lowest since Sept 20 at $2,589.59 earlier in the session. US gold futures fell 0.6% to $2,602.40.
"Dollar strength is weighing heavily on gold. Interestingly, the relationship seems to have dissipated for much of the year, but now it's back in force ever since the election," independent analyst Ross Norman said.
The dollar index rose to a four-month high, as investors continued to pile into trades seen as benefiting from the incoming Donald Trump administration. A stronger dollar makes bullion less attractive for holders of other currencies.
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"Gold has succumbed to the purple patch of the US dollar in the aftermath of the election. The President-elect's policies appear to be a boon for the dollar and potentially from an inflationary standpoint, it could slow down the Fed's rate-cutting trajectory in 2025," said Tim Waterer, chief market analyst at KCM Trade.
Gold is considered a hedge against inflation, but higher interest rates reduce the appeal of the non-yielding asset.
Focus is on the October Consumer Price Index data on Wednesday, the Producer Price Index and weekly jobless claims on Thursday, and retail sales data on Friday.
Multiple US central bank officials are also scheduled to speak this week, including Fed Chair Jerome Powell.
"There is still a fundamental path higher for gold, though it will likely require the dollar to lose some momentum. A soft inflation report would increase the odds of a December rate cut, which may give gold a reprieve," added Waterer.
Traders see a 68.5% chance of a rate cut in December, versus around 80% chance before Trump's victory, according to the CME FedWatch Tool.
According to Reuters technical analyst Wang Tao, spot gold may retest support at $2,610, a break below which could open the way towards $2,566-$2,588.
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Global Oil Prices Plunge Sharply
Global oil prices have fallen by more than 4%.
On Tuesday (October 15), the price of West Texas Intermediate (WTI) dropped by $3.33, or 4.5%, settling at $70.50 per barrel. Meanwhile, Brent crude fell by $3.28, or 4.2%, to $74.18 per barrel.
Both benchmarks hit their lowest levels earlier in the day, with prices dropping by at least $4.
The decline in oil prices is attributed to Israel’s announcement not to strike Iran’s oil facilities, along with forecasts of weak demand.
Mass Business Shutdowns Spark Nationwide Alarm
The news is alarming. Over the past two months (August and September), around 150 companies from both domestic and international groups, including City Group, BSRM, and US-Bangla, have decided to shut down their operations. This will put the jobs of hundreds of thousands of people at risk, while also damaging the national economy.
According to information from the companies, they are closing permanently based on decisions by their boards of directors. Around 160 companies are already in the process of shutting down. The list of closures includes both small enterprises and large corporations. These companies, registered with the Registrar of Joint Stock Companies and Firms (RJSC), come from both product and service sectors. Additionally, some companies that registered with plans for new investments are now on the closure list.
Data from the RJSC shows that 128 companies closed down in the last five months (May to September). Of these, a record 46 companies shut their doors in August alone, followed by 26 in September. Between July and September, a total of 83 companies ceased operations.
It has been reported that the number of closures began to rise in July, the first month of the current fiscal year. Government data indicates that 16 private companies closed in June, followed by 21 in July.
Recently, political instability and the impact of floods have caused severe damage across various sectors, particularly in industry, tourism, agriculture, and services. In addition, labor unrest in the ready-made garment (RMG) sector—one of the country's top exports—is causing further instability. If the situation does not improve, business owners may face even more difficulties.
Companies Closing Permanently
According to the information provided by the companies, based on board decisions, many businesses are shutting down permanently. Around 160 companies are already in the process of closure. These include both small businesses and large corporate entities, spanning both product and service sectors. Some companies that had recently registered for new investments are also shutting down.
The Registrar of Joint Stock Companies and Firms (RJSC) reports that 128 companies closed in the last five months (May to September), with August alone witnessing a record 46 closures, followed by 26 in September. During July-September, 83 companies ceased operations.
The trend began in July when 21 companies closed, compared to 16 in June.
Causes of Business Shutdowns
Political instability and floods have severely affected various sectors, particularly industry, tourism, agriculture, and services. Additionally, labor unrest in the ready-made garment (RMG) sector—one of the country’s top exports—has created further uncertainty. If the situation does not improve, businesses will face even greater challenges.
Domestic Companies Shutting Down
City Group: Shutting down 30 companies, including City Hair Oil, City Seed Crushing Industries, City Condensed Milk, Shampa Sugar Industries, City Biscuit, and several oil mills. The group has appointed a liquidator, G.K. Rajbongshi, who called for an Extraordinary General Meeting (EGM) in September for closure proceedings.
US-Bangla Group: Closing five companies, including US-BD Security Services, US-Bangla Furniture, and US-Bangla Pharmaceuticals. Liquidators have been appointed following their EGM in September.
BSRM Group: Appointed a liquidator for its Recycling Industries division.
Other Companies: Hospitals like Asmat Ali Khan Central Hospital, healthcare companies such as Lab Quest, and paper manufacturers like Hosendi Paper Mills are also shutting down. Additionally, firms from diverse sectors—including Esquire Holdings, Intek Greenpack, and Urban Fit Properties—are winding up operations.
Foreign Companies Closing Operations
Taiwan-based Maryland Engineering and Singapore-based Weeding Private Company are among those shutting down operations.
South Korea’s Bride Medical & Education Services and India’s Shipcard Marine Bangladesh Ltd. have decided to close voluntarily.
Kite Tech International has also approved its closure during a recent EGM.
Economic and Business Outlook
Mir Nasir Hossain, former FBCCI president, noted that many companies are struggling to recover from pre-existing economic crises. While some businesses have managed to survive, others couldn’t overcome the current challenges. He expressed hope that the business environment will improve soon.
Abul Kasem Khan, vice-chairman of A.K. Khan Group, explained that registering new companies or closing existing ones is a regular part of business. Some companies are shut down to avoid taxes or losses, while others close to reinvest elsewhere. He emphasized that the current economic challenges began three years ago but expressed optimism about future domestic and foreign investments.
Analysts' Perspective
Analysts attribute the closures to inflation, rising production costs, reduced sales, high-interest rates, labor unrest, technical and logistical issues, raw material shortages due to dollar crises, and global conflicts. Political shifts have also limited business opportunities for some companies. However, they believe that the situation will not persist for long and expect improvements in the near future.
This report reflects the growing trend of business closures, driven by both internal and external challenges. October is expected to continue this pattern, with more companies planning EGMs to formalize their shutdowns.
Gold Prices Soar in Bangladesh As Well As World Market
A new history has been created in the price of gold, breaking all previous records in the world market. For the first time in the world market, the price of one ounce of gold exceeded 2,711.19 dollars. As such, the price of this precious metal can rise and create new records in the country's market at any time.
On Friday (October 18) at 12:00 pm, the price of gold in the spot market was at $2,711.19. The price rose $18.10, or 0.67 percent per ounce in one day.
The US election, the Federal Reserve's interest rate cut, and tensions in the Middle East are now driving gold prices higher in the global market, Reuters reported.
Bangladesh Jewelers Association (BAJUS) determines the price of gold in the country's market. According to the latest prices offered by the organization, the best quality or 22-carat gold per bhori is priced at Tk1,37,453. This is the highest price of gold in the market of the country so far. The price of 21-carat solid gold is Tk1,31,197, 18-carat is Tk1,12,453, and the traditional method is fixed at Tk92,286.
BAJUS Standing Committee on Pricing and Price Monitoring Committee decides to increase or decrease the price of gold on behalf of the organization. A member of this committee said, "The rate at which gold prices are increasing in the world market, the price of gold will have to be increased in the country's market as well. There is no alternative."
He said, "I decided to increase or decrease the price of gold based on the international market as well as the local market."
Gold Prices Make New History in World Market
A new history has been created in the gold prices, breaking all previous records in the world market. For the first time in the world market, the price of one ounce of gold exceeded 2,724 dollars.
The price of gold in the spot market was at 2,724.7 dollars till 5 pm on Friday (October 18). The price of gold has increased by about 13 dollars per ounce in a span of one day.
The US election, the Federal Reserve's interest rate cut, and tensions in the Middle East are now driving gold prices higher in the global market, Reuters reported.
Bangladesh Jewelers Association (BAJUS) determines the price of gold in the country's market.
According to the latest price offered by the organization, the best quality or 22-carat gold per bhori is priced at Tk1,37,453. This is the highest price of gold in the market of the country so far. The price of 21-carat gold is fixed at Tk1,31,197, 18-carat is Tk1,12,453 and the traditional method is Tk92,286 per bhori.
Apparel Industry Currently Stable: BGMEA
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) today said that the country's apparel industry is currently stable after going through a challenging period.
"Buyers have their confidence in the apparel industry of Bangladesh," said BGMEA President Khandaker Rafiqul Islam while speaking at a press conference at its office here.
The BGMEA President said, "By the efforts of the BGMEA board and with the cooperation from the government, a task force has been formed by the army to protect the factories and the task force is conducting regular patrols to ensure the security of the garment hubs. BGMEA has also introduced community policing in collaboration with the Army."
He said the BGMEA Board has been able to deal with a tough situation with the cooperation of the government, owners, workers, Bangladesh Army, and law and order forces. In this connection, he on behalf of the BGMEA board expresses gratitude to all, including the Government and the Army.
BGMEA Senior Vice President Abdullah Hill Rakib and other board members were present at the press conference.
Speaking on the occasion, other BGMEA leaders said that some 39 factories, which were affected by the recent labor unrest, were unable to pay the salaries and allowances of their workers for the month of September.
They said the BGMEA has also requested the Ministry of Finance to provide interest-free bank loans at easy terms and conditions to 39 RMG factories, which were affected by the recent unrest so that they can pay September wages.
Besides, the BGMEA said some four million workers in the garment industry have been brought under the TCB fair price product sale scheme.
Asif Mahmud Sajeeb Bhuiyan, Adviser to the Interim Government of the Ministry of Labor and Employment, inaugurated the government’s TCB product sale program for garment workers on October 16, 2024.
The BGMEA has sought the government's support in the following areas to maintain the competitiveness of the industry and thus move the industry forward:
These are- maintaining law and order in the industry; simplifying and expediting customs and port procedures; stopping unnecessary delays in loading and unloading from ships at Chattogram Port; Non-disconnection of factory utilities for the next three months during this critical time of the industry; ensuring that banking sector reforms do not create any negative impact on production and commercial activities; ensuring that if action is taken against any person, his or her businesses are not harmed; forming a task force comprising NBR and Bangladesh Bank to formulate business-friendly appropriate policy support for the industry; ensuring adequate power supply to industry and formulating a sustainable power and energy policy, including rational pricing of power.
Besides, the BGMEA said many factories' ongoing export orders are at risk due to the labor unrest. In such a case, the association demanded non-classification of loans against all types of loans and provision of rescheduling facility as per recently issued BRPD Circular Letter No-44 dated October 14, 2024, by Bangladesh Bank.
The other demands include providing instructions to the concerned authorities for allowing gas supply through cylinders from CNG stations on an urgent basis to continue the normal production activities of ready-made garment factories; taking appropriate measures to ensure that the disposal of "jhut" and other recyclable wastes is free from external influences.
The rate of cash incentives to the RMG industry has been reduced because of the country’s transition from LDCs. This has increased unintended risks and disruptions in the industry.
The BGMEA said there are many examples of middle-income countries offering incentives in different forms to their industries after the LDC transition.
Therefore, considering the importance of the garment sector in the overall economy of Bangladesh, it is important to consider the issue of reinstating the incentives.
The association also called for arranging a safe exit policy for the RMG entrepreneurs, who are unable to sustain their businesses due to various adversities.
Citing that the garment industry has taken a heavy toll over the last two months due to prolonged labor unrest, the BGMEA leaders also demanded to bring those, who would play tricks on industry and economy, to book.
The BGMEA proposed to exempt steel-constructed buildings, built between November 2013 to February 2021, from providing Fire Resistance Rating of Structural Element in light of NTPA, 2013 or BNBC-2020 instead of BNBC-2006.
Because of the proposal, it has been decided that there is no requirement to provide a Fire Resistance Rating of Structural Element for not more than one story and up to 8.0 meters height and unconditionally for not more than three stories or up to 11.0 meters height subject to the compliance of the supplementary regulations of the cod.
Source: BSS
Banking Sector Reforms Underway, Customers Confidence Being Restored
The banking sector has been on the path of development since the interim government took over. Looting in the name of loans has stopped, and customers are regaining confidence in deposits. As a result, the liquidity crisis has started to decrease.
Under the leadership of the dictator Sheikh Hasina, the Awami misrule of almost 16 years has been the festival of looting and money laundering. A large part of this was taken from the bank by the party leaders and workers in the name of fake company loans. Several banks are now on the verge of bankruptcy due to such unusual looting.
But hopefully, the banking sector has started to turn around since the interim government took over. According to the data of Bangladesh Bank, at the end of last August, 43 banks out of 61 scheduled banks have excess liquidity, amounting to Tk 1 lakh 90 thousand 306 crores.
Excess liquidity in five state-owned banks is Tk 63 thousand 670 crore. Of this, only Sonali Bank has 49 thousand 43 crores. 31 private banks have 91 thousand 674 crore taka. Besides, additional liquidity in 9 foreign banks is 34 thousand 677 crores.
Banking sector expert Dr Toufic Ahmad Choudhury said that the owners or the board used to collect deposits from all the employees. Then they took them under the name of sharing and lending. As these are stopped, the confidence of the customers is returning. As a result, deposits in banks are also increasing.
Towfiqul Islam Khan, Senior Research Fellow of Center for Policy Dialogue (CPD) said, that if the hide-and-seek game that has been going on in the banking sector for a long time is not overcome, people's trust will not be returned.
Mahfuz Kabir, the research director of the Bangladesh Institute of International and Strategic Studies (BIISS) said that Banking
Govt to No Longer Determine Electricity, Gas Prices
Bangladesh Energy Regulatory Commission (BERC) will determine the price of electricity and gas from now, said Muhammad Fauzul Kabir Khan, the adviser for the Ministry of Power, Energy and Mineral Resources.
He stated this at a seminar related to 'energy' organized at a hotel in the capital on Sunday (October 20).
Muhammad Fauzul Kabir Khan said, "Not the government, Bangladesh Energy Regulatory Commission (BERC) will determine the price of electricity and gas from now on through public hearings. This decision will come through BERC."
He said that the previous government also cheated on people about fuel. They were not interested in gas exploration. They were interested in building a power plant citing urgent reasons and increased demand.
The energy adviser said that the government has no objection if any organization wants to take the initiative of renewable energy production. However, if they want to sell electricity to the government, they must come through a tender.
He also said that currently, the elected government is not in power, but the interim government has taken charge. There is no designated bidder in the ministry now.
Fauzul Kabir said about the movement on various demands, "There is no opportunity to accept all the demands. If you think this government is weak, you will be wrong. Banking Commission is necessary to build a strong banking sector in the future."
