State Bank's lower floor price on gold bars ensures auction success
State Bank's lower floor price on gold bars ensures auction success
The State Bank of Viet Nam's second gold bar auction yesterday was unexpectedly successful, with 25,700 taels (30,840 ounces) sold.
After the failure of the first auction on March 28, which drew only two buyers who bought only 2,000 taels out of an available 26,000 taels (approximately one tonne), the central bank held another auction to sell the remaining gold.
The central bank set the reference price at VND43.61 million (US$2,076) per tael on Wednesday while the global price declined yesterday morning.
However, yesterday's auction was a success as the central bank adjusted the floor price to VND43.23 million per tael, lower than the market price.
Out of 22 banks and businesses registered to participate in the auction, 20 won 257 lots (one lot includes 100 taels of SJC gold).
The lowest winning price was the floor price and the highest winning price was VND43.37 million. The central bank did not set the ceiling price for the auction.
The largest winning bidder bought 3,000 taels while the smallest one bought 400 taels. (Each bidder was allowed to bid for between five and 20 lots.)
The domestic gold price increased after the first auction despite a fall in the global market, but the metal's price declined yesterday afternoon.
Before the auction, Saigon Jewelry Co Ltd posted its trading price earlier yesterday morning at VND43.30/43.50 million ($2,070) per tael, but the price decreased to VND43.20/43.35 million ($2,084) late in the day.
Director of the SBV's Central Banking Department Pham Bao Lam said that the central bank would hold frequent gold bar auctions this month in a move to increase the supply source for the domestic market and stabilise the local gold market.
The next auction would take place today and another three auctions would be held next week, Lam said.
Industry insiders said that the decision to hold gold bar auctions consecutively aimed to minimise speculation and to prevent gold traders from increasing the metal price after the auctions.
In the global market, steep losses in pan-Asian shares outside Japan sparked a sell-off in gold as investors covered the equities losses, pushing gold down one per cent to a 10-month low of $1,541.14 an ounce
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