Appetite for gold
Appetite for gold
On November 8, the State Bank of Viet Nam sold 14,800 gold taels of the 15,000 that it offered at its 69th auction. The remainder of 200 taels was par for the course, with previous auctions recording similar figures.
However, a representative of the SJC Company who did not want to be named, said trading in gold taels was very slow on those days.
His company was only trading between 700 and 2,000 taels each day, much lower than the 8,000 to10,000 taels recorded during the same period last year.
While people seem to have turned their back on gold, they have queued to buying gold jewellery in great quantity.
Many factors have contributed to this change from the long-standing habit of keeping savings in gold bars. One factor is the disparity between domestic and global prices of gold bullion is too large, often at over VND3 million, or even between VND5 and 6 million per tael.
Also, people cannot deposit their gold at banks, and the number of places where they can trade their gold bars has reduced significantly. So thousands of shops that once traded in gold bars now just sell jewellery.
"The people who are saying no to gold bullion are shifting to 24-carat gold jewellery, mainly gold rings.
This is because the price of pure gold jewellery is not so different from the global rate, and it can be easily sold at any gold shop," said Nguyen Van Dung, chairman of the HCM City Association of Fine Arts, Gold Jewellery, and Gemstone.
The owner of a gold shop in southern Long An Province's Ben Luc District also said that people's demand for pure gold jewellery had risen ever since the gold bullion market was tightened.
He said transactions related to gold bars in the locality decreased sharply and locals shifted to keeping their savings in pure gold rings.
The sharp decrease in demand for gold bullion suggests that the central bank should reconsider conducting less gold bullion auctions .
Some analysts say that the domestic gold market should be let to work as it used to, meaning enterprises should be allowed to continue importing the precious metal and the central bank should act as a manager of the market, not continue its current role as a gold trader.
They expect the central bank to face liquidity problems if it continues to auction gold. It would have to use a lot of dollars to import gold for auctions, and this could create a local shortage of the greenback.
In addition, when the central bank is directly participating in trading gold as it is doing now, it will face the risks associated by fluctuations in gold prices, as will the domestic gold market.
But there are others who still support the central bank's gold auctions.
They say that the auctions, held for nearly one year, has helped stabilise the gold market, and pushed domestic and global prices closer to each other. But they also feel that the frequency of such auctions should be reduced.
vietnamnews
