Gold prices drop to three-week low amid global slump
Gold prices drop to three-week low amid global slump
Local gold prices yesterday fell to a three-week low of VND35 million (US$1,653) per tael, following the slightly downtrend of spot gold in the world market at $1,249 an ounce.
From north to south, SJC gold was down VND50,000 per tael ($2.3) to end at VND34.98-35 million ($1,653). One tael is equivalent to 1.2 ounces. On Monday, the local gold lost VND200,000 ($9.4) per tael.
Meanwhile on the kitco.com trading floor, gold was selling at $1,249.60 per ounce. Reuters said investors were reluctant to take big positions in bullion a week ahead of a US Federal Reserve policy meeting, when it could announce another cut to its bond-buying stimulus.
Local gold plunged 28 per cent in 2013, ending a 12-year bull run, tarnishing the metal's appeal as a hedge against inflation.
The fall in local gold prices was due to the State Bank of Viet Nam's efforts, including gold auctions. The central bank sold 1.82 million taels (69.9 tonnes) of gold bars through 76 auctions in 2013. The attempt was to cut local gold prices to VND34.6-34.7 million (US$1,633) per tael at the end of 2013, down VND12 million ($566.57) per tael, or 24 per cent over the 2012 year-end.
Part of the auction sales went to credit institutions to help close outstanding gold deposits. Another part of the sales was sold to gold firms to meet the market demand.
They will continue the sales this year in an attempt to further stabilise the domestic market and address imbalances between supply and demand. Observers assumed that local gold would keep losing its value this year.
Nguyen Tri Hieu, a gold expert, told Investment newspaper that "in the medium-to-long term, local gold would follow the downtrend of world gold. Many investors have left this metal, which I see as a wise move because there are no signs of a recovery this year."
The US dollar traded at VND21,140-21,150 in the black market, while commercial banks quoted the dollar at VND21,070-21,110, down VND5-10 over Monday.
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