Intervention in VN gold market urged
Intervention in VN gold market urged
The gap between global and domestic gold prices is expected to widen in the coming days if the central bank does not make timely interventions, market observers say.
Gold prices late last week soared to a stunning VND48.2 million per tael when the market opened. And just two hours later, it had increased by VND200,000 to VND48.4 million.
Based on the exchange rate between the dong and the US dollar listed at Vietcombank on October 5, the domestic gold price was VND3.2 million (US$152) per tael than the global rate per tael (a tael is 1.2 ounces).
Tran Thanh Hai, director of the Viet Nam Gold Business Company, said scarcity of the precious metal had forced domestic prices up.
"The principle governing gold trading enterprises including Sai Gon Jewellery Company (SJC) is to buy and then sell. Meanwhile, increasing market demand forces leading gold institutions to mobilise the metal from small gold traders, thus pushing domestic prices up," Hai told the Tuoi Tre newspaper.
The scarcity of gold has become more acute after the central bank's decision to stop gold mobilisation which will come into effect this November 25.
"A large volume of gold mobilised from the society was sold at a very low prices by banks particularly five banks that were in 2011 allowed to mobilise and sell gold bullions to stabilise the market and now, the banks will have to buy them again anyway before they have to stop their gold mobilisation. This has caused domestic gold prices to go up, " said Nguyen Thanh Long, chairman of the Gold Business Association.
Despite such strong pricing fluctuations, the central bank is yet to take any action to control the market.
Earlier, the central bank had twice allowed the recasting of damaged SJC gold bars and the transfer of non-SJC bars covering a total of 350,000 taels, equivalent to 13 tonnes. However, information relating to the number of non-SJC gold bars transferred has not yet been revealed.
In mid September, the central-bank gave the go-ahead for the SJC Company to convert 13 tonnes of gold bullion of other brand names into its national SJC brand.
The central bank giving the green-light to recasting non-SJC gold bullion came after petitions from banks and gold traders, as SJC has been chosen as the national brand and the central bank has a monopoly on bullion production.
Nguyen Hoang Minh, deputy director of the State Bank of Viet Nam Branch in HCM City, said the SJC company already finished the recasting of damaged gold bars, but the recasting of non-SJC bullion would take more time since they had to be verified carefully first.
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