People buy gold products at a store in HCM City. The central bank is postponing gold auctions in light of the large gap between domestic and global prices. — VNA/VNS Photo Hoang Hai

HA NOI (Biz Hub) — The State Bank of Viet Nam (SBV) is postponing gold auctions in the light of the large gap between domestic and global prices of the precious metal.

"The price gap is large but the demand for gold bullion is almost zero. The SBV has no plan yet," Nguyen Ngoc Canh, the newly-appointed head of the Foreign Exchange Management Department, told Vnexpress.

The SBV is the lone provider of gold bullion to the domestic market. Yesterday afternoon, the Sai Gon Jewellery Company (SJC) posted prices of VND35.89 million to VND36.01 million (US$1,684 to $1,690) per tael for gold on its website. At the same time, the spot price for gold on Kitco.com was $1,221.70, down from $1,222.90 on Tuesday.

In an attempt to fan market interest last year, the SBV held 76 auctions and sold a total of 1.82 million taels of gold. However, they have held off on gold auctions since the beginning of this year.

Last Monday, and for the first time since June, the SJC quoted a price that was VND5 million ($235) higher per tael than the current world price. One tael is equivalent to 1.2 troy ounces. The gap has been attributed to significant changes in the global market coupled with the slow movement of the domestic market.

"The current prices are absolutely decided by the market," Le Xuan Tung, director of Phu Quy Jewellery Company, told Vnexpress. "Nearly all people come to buy and not to sell. That's why the price of gold remains high," quipped the owner of Kim Hien Gold Shop in Hai Phong City.

Tung revealed that the SVN actually invited Phu Quy to join in gold auctions, but his company declined because of the dull picture for gold in the world market.

Experts said that if the large gap remained, it would produce more pressure on foreign exchange rates and encourage gold smuggling. —VNS