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Central bank moves to cool gold fever
Gold prices reached a new record high last Tuesday at over US$1,910 per ounce for spot delivery in the world market.
The price in the domestic market soared to VND49.1 million per tael. (A tael is 1.2 troy ounces).
The domestic price hike was not only influenced by the world prices but also by speculation. There were also fears that the pressures on Viet Nam's dong would make it weaker.
Many people stood in long queues waiting for their turn to buy the precious metal, with many of them withdrawing from high-earning bank deposits to do so.
The country saw for the first time the concept of stabilising gold prices come into play. People are more familiar with price stabilisation efforts for essential items like food items.
Prices at the Sai Gon Jewelry Company (SJC), the biggest gold trader in the country, were lower than open market prices by between VND100,000 to VND200,000 ($4.7 to $9.4) per tael. It was rumoured that this was a strategic move by the firm.
On Tuesday afternoon, the State Bank of Viet Nam granted licences for new imports of gold, which illustrated what newly appointed Governor Nguyen Van Binh had announced in the morning. He had said that imports would be allowed at the right time and of the right amount to stabilise the market, limit speculation and smuggling.
Experts, however, noted it was hard to stabilise gold prices as Viet Nam had to import the precious metal to satisfy people's demand to keep it as a secure asset, and to make jewellery for both local and export markets. Speculation had always been a factor in gold pricing, they said.
Putting into operation a gold exchange might be of help to minimise the gap between prices in and outside Viet Nam and ensure sufficient supply, they said.
Binh also mentioned that he would have "flexible mechanisms" that would try to use the gold people hoarded in their homes.
The governor said that the central bank would in September submit to the Government for approval a draft decree on gold market management that would replace the existing one.
Under the new decree, the bank will directly manage the production and circulation of gold bars as well as import and export of the precious metal.
The central bank wants to place restraints on gold bar production and trade. It will take the responsibility for organising the production of gold bars, or issue licenses to a limited number of businesses to do so.
There will also be a limited number of businesses and credit institutions experienced in the gold business that will be allowed to engage in gold trading.
Gold prices began falling on Tuesday and closed Thursday at around VND45.2 million per tael. The short-term fall, however, ended on Friday with world prices bouncing back to $1,787 per ounce, up $86 on the previous day's lowest level.
The domestic market closed on Friday at VND46.95 million, though it had climbed to VND47.2 million in the day. Demand soared "unexpectedly", according to the representative of a gold firm. Saturday's opening price was VND48.3 million, which then declined to VND47.8 million at noon or almost VND2 million higher than the world price at over $1.797 per ounce.
Thuy Anh
vietnamnews
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