The ups and downs of gold price

Why is the price of gold swinging so sharply in Bangladesh? The most common explanation is both simple and unsatisfying. Prices move because the global market moves. Since Bangladesh neither sets nor significantly influences international prices, its domestic market ends up following what happens abroad. Yet, while technically correct, this explanation fails to capture the full complexity of the situation. A more useful approach is to dig one layer deeper and ask why gold prices are so volatile worldwide and why that volatility feels especially intense right now. That line of questioning opens the door to a much bigger discussion about changes in the global monetary order, with Bangladesh, like every other country, riding along as a passenger. In that context, gold is better understood not just as a commodity but as a kind of monetary barometer. Its price tends to jump and swing when confidence in the existing monetary setup begins to weaken. 

For decades, the global economy has rested on a dollar-centric system. After the United States moved away from the gold standard in the early 1970s, the world entered a phase where the dollar became the backbone of global trade without being tied to any physical asset. Countries sold goods and energy in dollars and then channelled those dollars back into American assets such as treasury bonds and equity markets. This arrangement kept demand for the dollar strong and allowed the US to consume more than it produced. As long as the system held together, gold stayed mostly in the background, rising gradually but rarely unsettling financial markets.   

That long-standing balance is now being tested by deliberate policy moves in several major economies. More countries are questioning the wisdom of holding unlimited dollar reserves, especially as the US struggles with towering debt and growing uncertainty over how far it is willing to manage the dollar's value. In effect, two competing Americas now shape the dollar debate. One is the financialised America that flourished under a strong dollar. A stronger currency meant cheaper imports, greater consumer purchasing power and steadily rising financial asset prices, all of which suited the old model well. The other is a more production-focused America that wants to rebuild its industrial base. For this camp, a weaker dollar is an advantage because it makes American labour and exports more competitive and eases the real weight of debt. The push and pull between these goals leaves markets unsure about which direction policy will take. Faced with that uncertainty, market guesses, and each guess sends ripples through all dollar-based assets including gold. In this environment, central banks and private investors have been moving more decisively towards gold. The Chinese central bank, for instance, has been steadily adding to its gold reserves as a buffer against any future move away from dollar dependence. When central banks step in as large buyers, price pattern obviously changes. 

These global currents meet a very different set of realities at home in Bangladesh. Remittance inflows from expatriate workers have risen sharply, with monthly totals crossing US$3.0 billion at several points in late 2025 and early 2026. This surge has strengthened the supply of foreign exchange in the domestic market. Part of this trend may be linked to shifts in global currency conditions, including a softer US dollar aimed at boosting American competitiveness. For Bangladeshi workers abroad, this can translate into stronger purchasing power, as earnings in dollars stretch further against the currencies they are paid in. The steady stream of remittance dollars has therefore put upward pressure on the taka. 

The Bangladesh Bank has responded to this remittance-driven dollar abundance by purchasing significant volumes from commercial banks. These purchases release taka into the system while stabilising the exchange rate, preventing excessive appreciation of taka that could hurt export competitiveness. Maintaining a high dollar rate can also serve domestic stability by easing inflation and supporting import affordability. The challenge arises if the dollar's global softness is being driven by deliberate currency choices in the United States and elsewhere, which increasingly appears to be the case. In that situation, propping up a stronger dollar at home may prove both costly and difficult to sustain. Doing so would demand repeated foreign exchange interventions and could gradually limit the central bank's room to respond to other economic pressures.  

These interventions also carry effects on asset prices that often go unnoticed. Gold is priced globally in dollars, so when international gold prices rise while the domestic dollar is kept artificially strong, local gold prices can climb faster than global benchmarks. On the other hand, when global prices pull back, domestic prices may not fall at the same pace. The question for Bangladesh then becomes one of balance. Is it worthwhile to prop up the dollar for an extended period even when remittance inflows are strong, simply to smooth out short term swings? Or, would it make more sense to let the exchange rate move with broader international trends, given that prolonged currency control can carry hidden costs through inflation and reduced policy flexibility?

There is also a social side to consider. In Bangladesh, gold serves as a traditional store of household savings, especially for women, and stands as a symbol of financial security. Volatility therefore has real distributive effects. Rapid increases make gold harder to access for middle income families while sudden drops leave those who bought at high prices facing losses from an asset long considered safe. Calm is hard to come by in the gold market since it sits at the intersection of enormous global forces. As long as the international monetary system stays shaky and domestic exchange-rate policy keeps pushing against the tide, gold prices are bound to keep swinging. Even so, the ups and downs of gold price will remain an important indicator of economic health in Bangladesh and beyond.  

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