Why Gold Price is Rising in Bangladesh & Globally 2025? | Five reasons why gold keeps getting costlier

Why Gold Prices Are Rising in Bangladesh and Globally in 2025

Gold prices have been on an upward trajectory, both in Bangladesh and around the world, raising concerns and interests among investors and consumers alike. As of 2025, various factors are contributing to this rise, making it essential to understand the dynamics behind these fluctuations. The increase in gold prices can be attributed to economic uncertainties, inflation, changes in consumer demand, geopolitical tensions, and global market trends.

Understanding the Current Gold Market

In 2025, gold prices have surged significantly, reaching record highs in many markets. In Bangladesh, for instance, gold prices have crossed BDT 100,000 per bhori (approximately 11.664 grams), a steep increase from previous years. Globally, gold is priced at around $2,000 per ounce, driven by a mix of demand and supply factors.

While gold is traditionally viewed as a safe-haven asset during times of economic distress, the current landscape reveals a complex interplay of elements that are pushing prices upward. According to a report by the World Gold Council, global demand for gold reached its highest levels in a decade, indicating a robust appetite for the precious metal.

Key Factors Driving Gold Prices Higher

# 1. Economic Uncertainty

Economic instability is one of the primary drivers of rising gold prices. With inflation rates soaring in many countries, investors are turning to gold as a hedge against currency devaluation. The International Monetary Fund (IMF) predicts that inflation will remain elevated in 2025, causing further interest in gold as a protective asset.

In many economies, the fear of recession has led to a lack of confidence in fiat currencies. As central banks raise interest rates to combat inflation, the resulting economic volatility encourages investors to seek refuge in gold. This trend has been observed globally, with countries like the United States and the Eurozone experiencing fluctuating economic indicators.

# 2. Increased Demand from Central Banks

Central banks around the world have been increasing their gold reserves significantly. According to the World Gold Council, central banks purchased a record 1,136 tons of gold in 2022, with many countries continuing to accumulate gold in 2025 as a precautionary measure against economic uncertainty. This institutional demand plays a crucial role in driving up prices, as it reduces the amount of gold available in the market.

Notably, countries like China and Russia have been significant contributors to this trend, diversifying their reserves away from the US dollar. This shift reflects a broader strategy among emerging markets to bolster their economic stability amid global trade tensions.

# 3. Geopolitical Tensions

Geopolitical factors also contribute to the rising price of gold. Ongoing conflicts and tensions in regions such as Eastern Europe and the Middle East create an environment of uncertainty, prompting investors to seek refuge in gold. For instance, the situation in Ukraine has led to increased volatility in global markets, causing many investors to flock to gold as a safer investment.

Moreover, tensions in the South China Sea and threats to global trade routes further exacerbate this uncertainty. As these geopolitical tensions persist, gold is likely to remain an attractive option for those looking to safeguard their investments.

# 4. Supply Chain Disruptions

Gold mining operations have faced significant disruptions due to various factors, including environmental regulations and labor strikes. These disruptions have limited the supply of gold in the market, further exacerbating price increases. The mining sector’s recovery post-COVID-19 has been slow, and this lagging supply is contributing to higher prices.

For instance, mining operations in major gold-producing countries like South Africa and Peru have encountered regulatory challenges, leading to reduced output. The International Council on Mining and Metals (ICMM) has noted that supply chain bottlenecks, along with increased production costs, have compounded these issues.

# 5. Technological and Industrial Demand

Finally, the demand for gold in technology and industry has surged. The use of gold in electronics, medical devices, and renewable energy technologies has increased, creating additional pressure on supply. Reports indicate that the electronics sector alone accounted for approximately 8% of total gold demand in recent years. As technology continues to advance, this demand is likely to grow, further supporting high gold prices.

The rise of electric vehicles and renewable energy technologies, which often utilize gold in their components, adds a new dimension to gold demand. As industries evolve, the need for gold in high-tech applications is expected to rise, influencing market prices even further.

The Impact on Bangladesh’s Economy

In Bangladesh, the rising gold prices have profound implications for both consumers and the economy. For many, gold is not just an investment but also a cultural asset, often used in weddings and ceremonies. The increased prices mean that many people may find it challenging to afford gold jewelry, impacting local jewelers and the overall market.

Moreover, the Bangladeshi Taka’s depreciation against major currencies has compounded the issue, making gold significantly more expensive for local consumers. According to the Bangladesh Jewellers Association, local gold prices have risen by nearly 30% in the past year alone, creating a challenging environment for buyers.

Local jewelers have expressed concern over the slowing demand as prices continue to rise. Families who traditionally invest in gold for weddings and special occasions are now reconsidering their purchases, leading to a decline in sales. This shift could have long-term effects on the jewelry industry and related sectors.

Global Trends and Their Local Impact

The global rise in gold prices influences local markets in distinct ways. For instance, in countries with strong currencies, gold remains a more accessible investment. Conversely, in nations experiencing currency devaluation, such as Bangladesh, the impact is more pronounced, leading to greater inflationary pressures on consumers.

In 2025, as the global economy continues to navigate challenges, the demand for gold is expected to remain strong. Analysts predict that unless significant changes occur in the economic landscape, gold prices may continue to climb. This trend will likely affect not only consumer behavior but also investment strategies across different markets.

Frequently Asked Questions

Q: Why is gold considered a safe-haven asset?
A: Gold is viewed as a safe-haven asset because it retains value during economic downturns and uncertainties, making it a preferred choice for investors looking to protect their capital.

Q: How do central bank purchases affect gold prices?
A: When central banks buy large quantities of gold, it reduces the available supply in the market, which can drive prices higher due to increased demand.

Q: What role do geopolitical tensions play in gold pricing?
A: Geopolitical tensions create uncertainty in financial markets, prompting investors to buy gold as a protective measure, which can lead to increased prices.

Q: How does technological demand influence gold prices?
A: The growing use of gold in technology and renewable energy increases overall demand, which can contribute to higher prices, particularly if supply remains constrained.