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Gold falls on global cues
Domestic gold prices declined by VND300,000-400,000 a tael (37.5 grams, 1.21 troy ounces) to around VND46.7-46.8 million a tael as they tracked global trends.
Saigon Jewelry Co (SJC), Vietnam’s biggest gold trader with a 90 percent market share, bought at VND46.7 million and sold at 46.8 million.
The Ho Chi Minh City-based Phu Nhuan Jewelry Co (PNJ) and Sacombank Jewelry Co (SBJ), and Hanoi-based Bao Tinh Minh Chau Co all traded at around VND46.6-46.8 million.
It means Vietnamese prices are still around VND1.8-2 million a tael higher than world prices at the official forex rate of VND20,834 to a dollar and around VND1.5 million at the unofficial rate of VND21,080.
Spot gold retreated to around $1,780 an ounce -- after climbing to over $1,800 -- following a meeting of the US Federal Reserve which decided not to launch the third round of quantitative easing.
The Vietnamese central bank’s decision to license import of 500 kg of gold, or 13,300 taels, was just enough for two days of sales, SJC said.
A similar amount shipped to Vietnam late last week sold out within two days, SJC deputy general director Truong Cong Nhon pointed out.
The State Bank of Vietnam has licensed the import of a further four tons for stabilizing prices, but the move does not seem to work with domestic prices remaining higher.
SJC yesterday sold 8,000 taels, with some buyers buying hundreds of taels, Nguyen Cong Tuong, deputy head of sales, said.
PNJ sold only 2,500 taels since it had almost run out of stock, Nguyen Thi Cuc, its deputy general director, said.
Other traders, without providing details, said they were mostly selling rather than buying.
The Vietnam Association of Financial Investors (VAFI) has recommended that the Ministry of Finance slap a value-added tax of 10-15 percent on retail sales of gold bullion and jewelry.
It has warned that if gold buying continues at this pace, Vietnam’s forex reserves will soon be drained since 95 percent of gold has to be imported.
But Nguyen Thanh Long, chairman of the Gold Business Association, said the introduction of this tax would not resolve the situation.
Bank deposit rates were capped at 14 percent while gold prices rose relentlessly, causing many people to turn to gold as an alternative investment channel.
Besides, world gold prices were likely to rise further since the global economy was yet to stabilize while the dong faced the risk of devaluation.
Those problems would only be resolved when the global and domestic economies stabilize and a safe haven was no longer required.
When people needed to go down that path, they would not care if they were charged VAT.
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