The price of gold in the local market more than doubled over a period of last five years, forcing most middle and lower middle class buyers to check the lure of the glittering metal.
Female customers are increasingly using imitation jewellery because of the exorbitant prices of gold.
Bangladesh Jewellery Manufacturers and Exporters Association (BJMEA) sources said that the use of 'gold-plated silver jewellery' has increased significantly following a continuous rise in the prices in gold.
The BJMEA statistics show gold prices in the domestic market shot up by Tk 6,600 per bhori (11.66 gram) over a period of last five years.
Bangladesh Jewellers Association (BJA) president MA Wadud Khan said the demand for gold jewellery dropped significantly due to continuous rise in the prices of the metal in the local market in keeping with that in the international market.
"The gold prices have increased as many as eleven occasions this year", he said.
The poor law and order situation has also contributed to the decline in demand for gold, he said.
The price of guinea gold (21 carat) which was Tk. 10,310 per bhori on the first day of the current calendar year increased to Tk. 12,600 on the first day of the current month. The maximum rise in the prices of gold was recorded between August and November.
Owners of big jewelleries such as Apan, Amin, Venus, Alangkar Niketan, Sananda, Purabi, Grameen, Alvi, Mona and Preetam reported a steep fall in their business inn the recent months.
The BJA president claimed that the hike in gold prices had been responsible for about 50 per cent drop in demand for gold jewelleries over that of the previous year.
"Customers have stopped buying gold jewelleries even as gift items due to their high prices", he said.
Usually, the country imports fashionable imitation Jewelleries from India, Pakistan, Singapore, Thailand and other neighbouring countries.
Besides, the silver jewellery shops are displaying huge gold plated ornaments as substitute for gold ornaments. The number of imitation jewellery shops has also recorded an increase because of the higher demand for the same.
Abrar Rahman, owner of Abrar's creative Jewellery, designs stone setting innovative imitation jewellery having price tags between Tk 3,000 and Tk 15,000.
He informed that some people were buying imitation jewelleries as wedding ornaments because of higher price of gold.
The high prices of gold did cost us dearly during last Eid, the period when the sale of gold ornaments picks up. Most jewellers could not meet even 70 per cent of their sales target in the last month, during the biggest festival of the Muslims.
The BJA which has 800 members in Dhaka carries out periodic review of gold prices through a committee.
"We don't know where the price will end up," a worried BJA president said.
While talking to the FE, BJMEA president Anwar Hossain said because of high prices of gold, the total annual demand for gold in the domestic market decreased to 30 tons in 2005 from that of 50 tons in 2001.
He said during the last fiscal gold ornaments worth was $ 20 million were exported. The export was higher in the previous year.
He also stressed the need for a proper policy formulation to boost this sector.
After the recovery of the US from devastating hurricane Katrina, Rita and Wilma recently, the gold prices registered a new hike in the international market, they added.
Gold price in the local market in 2005
01-01-2005 Tk 10, 310/-
05-01-2005 Tk 10,400/-
11-01-2005 Tk 10,100/-
13-03-2005 Tk 10, 400/-
22-06-2005 Tk 10,600/-
02-08-2005 Tk 10,800/-
15-08-2005 Tk 11,100/-
19-09-2005 Tk 11,400/-
03-10-2005 Tk 11,800/-
21-11-2005 Tk 12,300/-
01-12-2005 Tk 12,600/-