Domestic gold prices experience strong changes

Wednesday, Jul 20, 2022 15:09

Customers buy gold at a shop in Ha Noi. On Wednesday, the gap between buying and selling gold prices remained high at VND2 million per tael. — VNA/VNS Photo

After seeing strong changes in the first days of this week, domestic gold prices on Wednesday morning were listed unchanged against Tuesday.

On Wednesday, SJC Company bought gold at VND63.3 million per tael and sold it at VND65.3 million per tael.

DOJI Company listed the metal at VND62.5 million per tael for buying and VND64.5 million per tael for selling.

On Wednesday, the gap between buying and selling prices of the metal remained high at VND2 million per tael, compared with nearly VND2.6 million per tael the previous day. Due to the strong fluctuations of gold prices in the world market, local gold trading enterprises widened the gap to prevent risks. However, the expansion of the gap will cause losses to those who buy and sell gold at this time.

Prices of the safe haven metal in the domestic market have changed wildly in the past few days due to the strong fluctuation in the global market.

After seeing one of the deepest daily plunges in history with nearly VND6 million per tael on Monday, domestic gold prices on Tuesday opened with a rise of about VND1 million per tael to VND63.5 million per tael for buying and VND64.5 million per tael for selling. However, the gold price then dropped to nearly VND60 million per tael for buying and VND62.5 million per tael for selling by midday, before rebounding to close the day at VND63.3 million per tael for buying and VND65.5 million per tael for selling.

In the global gold market, the spot gold price on the Kitco floor closed Tuesday at US$1,711 an ounce. After conversion, this price is equivalent to VND48.56 million per tael, about VND16.74 million per tael lower than the SJC gold price.

According to experts, the global gold prices were down on dollar appreciation, with investors selling assets, including gold, to buy the greenback.

However, gold price in the domestic market on Tuesday fluctuated stronger than that in the global market because local gold trading enterprises previously adjusted down their prices slower than their global counterparts so they had to make a stronger adjustment on Tuesday, according to Nguyen Thanh Long, chairman of Viet Nam Gold Traders Association (VGTA).

According to Long, the strong volatility of gold prices does not have a great impact on the domestic market and Viet Nam’s macro economy as the metal currently is not a popular investment channel in the country.

Despite the small-sized gold market, Long suggested that the State Bank of Viet Nam should license qualified enterprises to import raw gold to produce jewellery. Currently, jewellery production enterprises are not allowed to import gold materials so they mainly have to buy in the market, which causes unstable local gold prices. The allowance will contribute to narrowing the gap between domestic and international gold prices. Currently, the price of domestic gold jewellery is more than VND4 million per tael higher than the world price.

As for gold bars, Long recommended in the long term, the SBV should eliminate the monopoly, licensing some other brands of gold bars, instead of only SJC.

As Decree 24/2012/ND-CP on gold market management was issued ten years ago, experts suggested a revision to make the policy in accordance with reality as well as meeting international rules.

According to finance expert Dinh Trong Thinh, a decade ago, Decree No 24 was issued to fight against the dollarisation and goldisation in the domestic economy, besides contributing to stabilising local gold prices and developing the domestic gold market in the direction of connecting with the international market. Currently, the first two targets have been achieved, but the SJC gold price is too high compared to the global one.

“Therefore, it is time for the competent authorities to consider revising Decree No 24 to remove the monopoly in SJC gold bar production in the country, which has caused the SJC gold price to stand too high compared with the global price as currently,” Thinh told Viet Nam News. — VNS

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