More needed to cool gold market

HCM CITY — Economists said authorities stabilise the gold market instead of increasing gold supply sources under the circular 32/2011/TT-NHNN issued recently by the central bank.

The circular permits commercial banks and credit institutions to transfer part of the gold deposited in their vaults into Vietnamese dong in an effort to create a larger gold supply to cool down the domestic gold market.

On October 6, Asia Commercial Bank, Techcombank, Eximbank, Sacombank and DongA Bank along with Sai Gon Jewelry Ltd Co were granted licenses to sell gold at prices near the world price.

It is expected to help close the gap between domestic and global gold prices.

Nguyen Cong Tuong, head of sales department of SJC, said by the end of October 10, the company had sold a total of 55,000 taels, of which 20,000 taels were sold on the first day of the circular's implementation.

Asia Commercial Bank said it had also sold 4-5 tonnes of gold.

After many days of selling a large quantity of gold, the domestic price decreased and the gap between the domestic and world price on October 10 was only VND300,000 (US$14.42) for each tael.

This was seen as an appropriate gap in gold price.

However, this wasn't enough to stabilize the gold market. The domestic gold price on October 11 was back on the increase and VND1.9 million ($91.3) higher than the world price per tael, if calculated on the bank exchange rate.

On October 11, although the world gold price did not increase remarkably compared to the day before and traded at $1,660 per ounce, the domestic price was VND43.45 million ($2,088) and VND43.75 million ($2,103) per tael, an increase of VND460,000 ($22) per tael.

Dr. Le Xuan Nghia, deputy chairman of the National Financial Supervisory Committee, suggested that the State Bank of Viet Nam allow some commercial banks to issue gold certificates that could be traded in the market.

Nguyen Van Trinh, deputy rector of University of Economics and Law, said there should be a national gold trading floor managed by the central bank so that people can purchase gold certificates and gold accounts.

As a result, the demand for gold investment is expected to decrease, and there will be no opportunities for gold speculation and price hikes.

The State will also limit gold imports and reduce pressure on the foreign currency market, he said.

The central bank has asked commercial banks to make a weekly report on outstanding gold loans and the number of customers as well as the purposes for lending. — VNS

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