Gold Prices Surge Again as Bangladesh’s Garment Industry Gradually Recovers
Gold Prices Experience a Roller-Coaster Rise
Last week’s “Black Monday” saw a significant drop in gold prices. However, as the market stabilized and geopolitical risks increased, gold prices began to rebound, now just shy of reaching a historic high. Spot gold surged 1.7% overnight to $2,472 per ounce, while gold futures surpassed $2,500, setting new record highs. The previous peak for spot gold was $2,483.78.
Juan Carlos Artigas, Head of Research at the World Gold Council, noted in a recent interview that four main factors typically drive gold prices: economic expansion, risk and uncertainty, opportunity cost (interest rates), and market momentum. Over the past two years, gold has seemingly become immune to high interest rates and a strong dollar, continuing to reach new highs despite these pressures. However, this immunity is not absolute.
Going forward, several factors will continue to influence gold prices. Escalating regional conflicts could disrupt oil supplies, leading to a sharp rise in oil prices, while gold’s role as a safe-haven asset will likely be emphasized during times of uncertainty.
Bangladesh’s Garment Industry Restarts
In recent years, Bangladesh has maintained a high economic growth rate, making it the second fastest-growing economy in South Asia. Leveraging its abundant labor and raw material resources, Bangladesh has actively integrated into the global supply chain, focusing on the export of garments and textiles. The country has also attracted substantial foreign investment by establishing export processing zones, eventually becoming the world’s second-largest garment exporter and a key supplier of low-cost fabric.
The garment industry, a cornerstone of Bangladesh’s economy, is now facing a challenging recovery. Recently, Mohamed Alibaba, leader of Blue Planet Group, confirmed that their garment factories have resumed operations. He emphasized, “The situation has stabilized, and we are hopeful for a smooth recovery.” SiATEX, another major player, has also reported a full business recovery.
Despite these positive developments, political instability remains a significant concern for the industry. Prolonged unrest could divert orders to neighboring countries such as Pakistan, India, and even China. Alibaba noted that during the initial phase of reopening, worker attendance barely reached 80%, raising concerns about the long-term impact on production. While buyers have expressed understanding, they are increasingly focused on timely deliveries and have called for additional measures to ensure supply chain stability.
Summary
The ongoing rise in gold prices suggests potential increases in raw material and transportation costs, which could pose significant challenges for the textile and garment import-export industry. On the other hand, it also signals growing confidence in global economic recovery, boosting consumer sentiment.
As Bangladesh’s garment industry restarts, industry experts note that low worker attendance during the initial reopening phase has caused a spillover of orders. Textile and garment companies in coastal regions of China, such as Guangdong, Fujian, and Zhejiang, have reported a noticeable but not overwhelming increase in orders transferred from Bangladesh. For Chinese cotton textile and garment companies, this shift is seen as more detrimental than beneficial.
Moreover, the month-long unrest in Bangladesh, which led to widespread factory shutdowns, has significantly impacted China’s exports of cotton yarn, grey fabric, and garments to Bangladesh. Some contracts have been delayed or canceled, severely disrupting Chinese companies’ order fulfillment schedules. The negative impact of Bangladesh’s political turmoil on China’s textile and garment exports cannot be underestimated, outweighing any potential benefits from increased Western orders.
