VietNam Business: gold

Showing posts with label gold. Show all posts

Sunday, January 23, 2011

Lifted import quota cools gold rush

HA NOI — Domestic gold prices yesterday plunged by VND1.2 million (US$61.53) from Thursday's record high to around VND31.85 million ($1,630) per tael, following the State Bank of Viet Nam's announcement late Thursday that it had approved additional gold imports. A tael is equal to 1.2 ounces.

Gold-selling districts in Ha Noi and HCM City saw prices change at least three times in the morning and early afternoon, with Saigon Jewelry Co, Sacombank Jewelry Co, Bao Tin Minh Chau, Agribank Jewelry Co and Phu Nhuaân Jewelry Co each quoting buy/sell prices at VND32.1-32.24 million per tael.

But late Thursday, with the domestic gold price VND1 million (around $50) higher than global prices, State Bank governor Nguyen Van Giau decided to allow 10 major gold trading enterprises to import an additional three tonnes of the precious metal over the course of the next week.

It marks the second time the central bank has allowed additional gold imports this year, allowing seven tonnes to be imported in July – a figure decried as too low.

"When people knew the gold import quota was so restrictive, many bought up gold," said Sacombank Jewelry Co general director Ton The Vinh Quyen.

But not everyone welcomed yesterday's move by the State Bank.

"Gold imports at this time may soak up the limited supply of dollars, while helping drive inflation up in the last two months of the year, when it is usually higher anyway before the lunar new year," said Do Thi The, a forex investor.

Similar concerns yesterday drove the cost of the greenback on the black market to VND19,850-19,880, about VND20 higher than on Thursday. However, bank exchange rates remained unchanged at VND19,470-19,500 per dollar, while the interbank rate continued at VND18,932.

The State Bank again yesterday denied rumours of a dollar shortage, saying that it continued buying up dollars from credit institutions in the third quarter, suggesting a plentiful dollar flow in circulation. However, yesterday's comments from the State Bank marked the third time since February it has issued a similar message to the public. — VNS

Friday, January 21, 2011

Vietnam grants new gold import licenses, quotas

Photo: AFP

HANOI - Vietnam's central bank granted permits for gold imports to several firms on Thursday, giving each a quota of 200-300 kg in a bid to narrow the spread between gold prices in the country and in world markets.

The licenses were issued on Thursday afternoon and are valid through Oct. 12, according to a report on Vneconomy.vn, the online version of the Vietnam Economic Times.

Vietnam effectively banned gold imports in mid-2008 to help tackle a trade deficit as the economy overheated, but the central bank has granted import quotas on a selective basis since then.

A source with direct knowledge of the licensing and quotas said nine firms were part of the arrangement, which would put the total volume somewhere between 1.8 and 2.7 tons.

There was no immediate comment from the State Bank of Vietnam, which earlier published an interview on its website quoting a senior official as saying the central bank would consider granting new licences if the price on the domestic market rose "unreasonably high".

Spot gold which has risen some 8 percent over the past month, hit an all-time high for a third straight session on Thursday, rising above US$1,360 an ounce, as a weak dollar pushed investors into bullion in the face of economic uncertainty and speculation of further monetary easing by central banks.

The import licenses were the first granted by the State Bank of Vietnam since February, and came in reaction to a widening spread between onshore prices and those on world markets.

Although the volume is limited it will have "a positive psychological effect" on the market, Vneconomy quoted Nguyen Thi Cuc, deputy director of importer Phu Nhuan Jewelry Co, as saying.

In Vietnam, gold in Hanoi had eased to VND32.77/32.85 million per tael by Thursday evening after rising as high as VND33.07/33.15 million earlier, according to Saigon Jewelry Co Ltd, the country's top dealer. One tael equals 1.21 troy ounces.

The unofficial exchange rate was quoted earlier at around VND19,800/19,850a per dollar at a major Hanoi gold shopa putting the gold price in Vietnam at a premium then of about $20 to global prices.

Markets will be tight

Earlier, the central bank's website quoted Nguyen Quang Huy, director of the foreign exchange department of the State Bank of Vietnam, as saying new imports might be permitted "at appropriate volumes and times, to stabilize the market".

Dealers in Asia said the Vietnamese comments helped nudge the price of gold up on the international market.

"People are going to focus on the fact that the Asian physical market will be tight. Last time Vietnam opened the door to gold imports, gold went up $20.

In percentage terms, it could translate into $30 today," said a Singapore-based trader after

Foreign exchange dealers have said the rise in global gold prices, and curbs on imports, had fed smuggling. Demand for dollars to buy this gold overseas was pushing down the value of the dong.

A similar scenario unfolded a year ago, leading the authorities to issue gold import licenses then, too. The pressure on the dong continued, however, and the central bank devalued the currency and raised interest rates just weeks after relaxing the import ban.

Traders said gold was being smuggled into Vietnam from neighboring countries and Thailand.

Nguyen The Hung, chief executive officer of Vietnam Gold Corp, said domestic supply was limited as investors had sold and businesses had increased gold exports when prices hit VND29-30 million per tael.

Speaking before the new licenses were announced, he said the differential between domestic and world gold prices had to be addressed. "The gap requires measures from the central bank."

SBV licenses gold imports, gold prices slightly down

The State Bank of Vietnam officially licensed some local enterprises to import 10 tons of gold, or over 200,000 taels, pulling local gold prices down VND300,000 a tael to VND32.8million a tael on Thursday.

The gold import quota is 200-300 kilograms each, and the license will valid through next Tuesday.

Earlier, local gold prices climbed to its lifetime record high of VND33.2 million a tael after an brief ease back to VND32.7million a tael.

The enterprises were given quota for local gold-trading firms to import gold include Sai Gon Jewelry Holding Co (SJC), Phu Nhuan Jewelry Joint Stock Co (PNJ), Agribank Gold, Silver and Gemstone Co, and Sacombank Jewelry Co Ltd (SBJ) among others.

It is estimated that 36 tons of gold were exported in the first six months of the year, according to the General Statistics Office.

Domestic gold prices Wednesday soared to a new record of VND33 million per tael (US$1,690), an increase of VND1.4 million ($72) per tael over previously-quoted price, as speculators created a run on gold shops.

A tael is equivalent to 1.2 ounces.

The gold-selling districts in Hanoi and Ho Chi Minh City were thronged with people and saw prices change at least four times in the morning, with Sai Gon Jewelry Co (SJC), Sacombank Jewelry Co, Bao Tin Minh Chau, Agribank Jewelry Co and Phu Nhuan Jewelry Co quoting buy/sell prices at VND32.85/33 million.

Domestic gold prices have increased by over 24.4 percent since January, when prices stood at about VND26.5 million ($1,360).

The increase made domestic gold price be VND1 million ($51.28) higher than global gold price, which ignites concerns involving gold smuggling to take profits. Domestic price is normally just VND200,000-300,000 higher than global price.

Central bank may allow gold imports

Gold trading enterprises may be allowed to import gold if domestic
prices continue to surge, says the head of the State Bank of Vietnam's
Foreign Exchange Department Nguyen Quang Huy.

The statement was made on Oct. 7 after domestic gold prices soared in
the afternoon. One tael of gold (equivalent to 1.2 troy ounces) costs
33.05 million VND (1,690 USD), a record high.

"The central
bank may consider allowing dealers to import a suitable quota to
stabilise market prices in line with global changes," Huy said.

He added that the sudden surge in gold prices was caused by the
increase in global prices, which are now at a record high of 1,349 USD
per ounce. Speculation and psychological worries also likely effected
the inflation.

As of Oct. 7 afternoon, the price of gold
in the domestic market was 1 million VND (51.28 USD) per tael higher
than the global price.

"The imbalance between supply and
demand is making gold prices ‘crazy'," said Huynh Trung Khanh,
International Gold Council's senior consultant official in Vietnam. "The
supply is drying up."

In July, the State Bank allowed
enterprises to import seven tonnes of gold. However, dealers said the
volume was unable to meet the market's growing demand.

In
August, the Vietnam Gold Trading Association asked the central bank to
allow them to import more gold bars to process, but the proposal was
rejected.

The increase in the price of gold caused the US
dollar's exchange rate to increase to 19,850 VND on Oct. 7 from 19,750
VND on Tuesday./.

Wednesday, January 19, 2011

Gold firms get import quotas amid price rally

HCMC – The State Bank of Vietnam on Thursday issued quotas for local enterprises to import gold, sending domestic gold prices down after strong rallies in the previous days.

Nguyen Thi Cuc, deputy general director of Phu Nhuan Jewelry Co. (PNJ), said her company had been allowed to import 300 kg of gold, or around 8,000 taels – a local measurement unit equivalent to 1.2 troy ounces.

PNJ has placed orders with foreign partners and shipments are expected to arrive in Vietnam late this week at the earliest.

Truong Cong Nho, deputy general director of Saigon Jewelry Holding Co. (SJC), said SJC could import 200 kg of gold, or 5,330 taels, and that the yellow metal would arrive early next week.

Domestic gold shot up to VND33.03 million and VND33.1 million per tael for buying and selling respectively at 2:30 p.m. on Thursday but the prices later dropped by nearly VND300,000 shortly after the import quotas were announced.

Local gold on Thursday was VND130,000 per tael higher than the world level, down from the VND860,000 recorded on the previous day.

The central bank also extended import quotas to other large gold firms such as Agribank and Sacombank jewelry companies but the quotas are small.

“The central bank decision will leave a positive psychological impact on the market, helping to ease price hikes, encourage buying and curb selling. Local gold prices might be lower than the world in the future,” Cuc said.

Cuc added buying surged strongly from 3:30 p.m. on Thursday. PNJ as of 5:00 p.m. had sold 5,000 taels and bought 2,800 taels.

Tuesday, January 18, 2011

Vietnam grants new gold import licenses, quotas

Vietnam grants new gold import licenses, quotas Vietnam's central bank granted permits for gold imports to several firms on Thursday, giving each a quota of 200-300 kg in a bid to narrow the spread between gold prices in the country and in world markets.

The licenses were issued on Thursday afternoon and are valid through Oct. 12, according to a report on Vneconomy.vn, the online version of the Vietnam Economic Times.

Vietnam effectively banned gold imports in mid-2008 to help tackle a trade deficit as the economy overheated, but the central bank has granted import quotas on a selective basis since then.

A source with direct knowledge of the licensing and quotas said nine firms were part of the arrangement, which would put the total volume somewhere between 1.8 and 2.7 tonnes.

There was no immediate comment from the State Bank of Vietnam, which earlier published an interview on its website quoting a senior official as saying the central bank would consider granting new licenses if the price on the domestic market rose "unreasonably high."

Spot gold, which has risen some 8 percent over the past month, hit an all-time high for a third straight session on Thursday, rising above $1,360 an ounce, as a weak dollar pushed investors into bullion in the face of economic uncertainty and speculation of further monetary easing by central banks.

The import licenses were the first granted by the State Bank of Vietnam since February, and came in reaction to a widening spread between onshore prices and those on world markets.

Although the volume is limited it will have "a positive psychological effect" on the market, Vneconomy quoted Nguyen Thi Cuc, deputy director of importer Phu Nhuan Jewelry Co, as saying.

The unofficial exchange rate was quoted earlier at around VND19,800/19,850 per dollar at a major Hanoi gold shop , putting the gold price in Vietnam at a premium then of about $20 to global prices.

Markets will be tight

Dealers in Asia said the Vietnamese comments helped nudge the price of gold up on the international market.

"People are going to focus on the fact that the Asian physical market will be tight. Last time Vietnam opened the door to gold imports, gold went up $20. In percentage terms, it could translate into $30 today," said a Singapore-based trader after

Foreign exchange dealers have said the rise in global gold prices, and curbs on imports, had fed smuggling. Demand for dollars to buy this gold overseas was pushing down the value of the dong.

Traders said gold was being smuggled into Vietnam from neighboring countries and Thailand.

Speaking before the new licenses were announced, he said the differential between domestic and world gold prices had to be addressed. "The gap requires measures from the central bank."

Vietnam grants new gold import licenses, quotas

The licenses were issued on Thursday afternoon and are valid through Oct. 12, according to a report on Vneconomy.vn, the online version of the Vietnam Economic Times.

Vietnam effectively banned gold imports in mid-2008 to help tackle a trade deficit as the economy overheated, but the central bank has granted import quotas on a selective basis since then.

A source with direct knowledge of the licensing and quotas said nine firms were part of the arrangement, which would put the total volume somewhere between 1.8 and 2.7 tonnes.

There was no immediate comment from the State Bank of Vietnam, which earlier published an interview on its website quoting a senior official as saying the central bank would consider granting new licenses if the price on the domestic market rose "unreasonably high."

The import licenses were the first granted by the State Bank of Vietnam since February, and came in reaction to a widening spread between onshore prices and those on world markets.

Although the volume is limited it will have "a positive psychological effect" on the market, Vneconomy quoted Nguyen Thi Cuc, deputy director of importer Phu Nhuan Jewelry Co, as saying.

The unofficial exchange rate was quoted earlier at around VND19,800/19,850 per dollar at a major Hanoi gold shop , putting the gold price in Vietnam at a premium then of about $20 to global prices.

Markets will be tight

Dealers in Asia said the Vietnamese comments helped nudge the price of gold up on the international market.

Foreign exchange dealers have said the rise in global gold prices, and curbs on imports, had fed smuggling. Demand for dollars to buy this gold overseas was pushing down the value of the dong.

Traders said gold was being smuggled into Vietnam from neighboring countries and Thailand.

Speaking before the new licenses were announced, he said the differential between domestic and world gold prices had to be addressed. "The gap requires measures from the central bank."

Sunday, January 16, 2011

Domestic gold prices set new record

Domestic gold prices soared on Oct. 6 to a new record of 33 million VND
per tael (1,690 USD), an increase of 1.4 million VND (72 USD) per tael
over Oct.5's price, as speculators created a run on gold shops.

A tael is equivalent to 1.2 ounces.

The gold-selling districts in Hanoi and HCM City were thronged
with people and saw prices change at least four times in the morning,
with Sai Gon Jewelry Co (SJC), Sacombank Jewelry Co, Bao Tin Minh Chau,
Agribank Jewelry Co and Phu Nhuan Jewelry Co quoting buy/sell prices at
32.85/33 million VND.

Domestic gold prices have
increased by over 24.4 percent since January, when prices stood at about
26.5 million VND (1,360 USD).

Sacombank Jewelry
general director Nguyen Ngoc Que Chi said on Oct. 6's rush of buyers was
due to a large number of speculators who had bought futures contracts
in prior months and now sought to acquire gold before the price shot up
further, putting a run on the available supply of the precious metal.

SJC's Hanoi director, Luu Quang Dien, agreed,
adding, "Many big trades are made by phone and the supply is limited, so
the company has to select familiar customers to whom to sell."

The increase made domestic gold price be 1 million VND (51.28 USD)
higher than global gold price, which ignites concerns involving gold
smuggling to take profits. Domestic price is normally just
200,000-300,000 VND higher than global price.

Rumours were rife on the gold market last week that supplies were
falling short of demand and that gold prices would continue to set new
record highs,so State Bank of Vietnam Governor Nguyen Van Giau
attempted to counter the rumours and blamed any rises in prices on
speculation rather than a gold shortage.

"With this
kind of sensitive item, our policy is not to completely ban gold
imports, but gold companies are not permitted to import any volume they
want," Giau said.

"Despite the shortage of gold at
this time, I don't think the State Bank of Vietnam will allow
enterprises to import more because of foreign exchange rates and
inflation," commented the head of a jewelry company who asked to remain
unnamed.

On the global market on Oct. 6, spot gold rose as high as 1,349.80 USD per ounce, its eighth record in the past two weeks.

The US dollar on black market on Oct. 6 also rose by 170 VND to
19,750-19,850 VND while bank exchange rates remained unchanged at 19,500
VND per dollar./.

Vietnam may allow gold imports if local prices jump

Photo: AFP

HANOI - Vietnam's central bank said on Thursday it would consider granting permits for gold imports if prices in the domestic market rose "unreasonably high", helping to drive world bullion prices up to another record.

Spot gold, which has rallied 8 percent over the past month, hit an all-time peak for a third straight session on Thursday, rising above US$1,355 an ounce, as a weak dollar pushes investors to bullion in the face of economic uncertainty and speculation of further monetary easing by central banks.

Nguyen Quang Huy, director of the foreign exchange department of the State Bank of Vietnam, said gold prices were still largely in line with world markets but the central bank was closely monitoring the situation.

"If gold prices in the country rise unreasonably high, the state bank may consider giving permission to businesses to import gold, at appropriate volumes and times, to stabilize the market so that the price of gold in the country sticks with the price of world gold," he said on the central bank's website, www.sbv.gov.vn.

Dealers said the Vietnamese comments helped nudge the price of gold up.

In Vietnam, gold rose to VND32.80/32.89 million per tael from VND32.67/32.75 million early on Thursday, according to Saigon Jewelry Corp, the country's biggest gold dealer. One tael equals 1.21 troy ounces.

The unofficial exchange rate stood at 19,800/19,850 dong per dollar at a major Hanoi gold shop, putting the gold price in Vietnam at a premium of about $20 to global market prices.

Vietnam banned gold imports in mid-2008 to help tackle a trade deficit as the economy overheated, but the central bank has granted import quotas on a selective basis since.

Repeat scenario

Foreign exchange dealers have said the rise in global gold prices, and curbs on imports, had fed smuggling. Demand for dollars to buy this gold overseas was pushing down the value of the dong.

The scenario appears to be a repeat of pressures that built up in Vietnam about a year ago, leading the central bank to grant quotas for several tons of gold imports.

The pressure on the dong continued, however, and the central bank devalued the currency and raised interest rates just weeks after relaxing the import ban.

He said the differential between domestic and world gold prices had to be addressed. "The gap requires measures from the central bank," he said.

Traders said there had been a significant amount of gold suggled into Vietnam from neighboring countries and Thailand.

Saturday, January 15, 2011

Domestic gold prices set new record

Domestic gold prices Wednesday soared to a new record of VND33 million per tael (US$1,690), an increase of VND1.4 million ($72) per tael over Tuesday's price, as speculators created a run on gold shops.

A tael is equivalent to 1.2 ounces.

The gold-selling districts in Ha Noi and Ho Chi Minh City were thronged with people and saw prices change at least four times in the morning, with Sai Gon Jewelry Co (SJC), Sacombank Jewelry Co, Bao Tin Minh Chau, Agribank Jewelry Co and Phu Nhuan Jewelry Co quoting buy/sell prices at VND32.85/33 million.

Domestic gold prices have increased by over 24.4 per cent since January, when prices stood at about VND26.5 million ($1,360).

Sacombank Jewelry general director Nguyen Ngoc Que Chi said yesterday's rush of buyers was due to a large number of speculators who had bought futures contracts in prior months and now sought to acquire gold before the price shot up further, putting a run on the available supply of the precious metal.

SJC's Ha Noi director, Luu Quang Dien, agreed, adding, "Many big trades are made by phone and the supply is limited, so the company has to select familiar customers to whom to sell."

Rumors were rife on the gold market last week that supplies were falling short of demand and that gold prices would continue to set new record highs, so State Bank of Viet Nam Governor Nguyen Van Giau attempted to counter the rumors and blamed any rises in prices on speculation rather than a gold shortage.

"With this kind of sensitive item, our policy is not to completely ban gold imports, but gold companies are not permitted to import any volume they want," Giau said.

"Despite the shortage of gold at this time, I don't think the State Bank of Viet Nam will allow enterprises to import more because of foreign exchange rates and inflation," commented the head of a jewelry company who asked to remain unnamed.

On the global market yesterday, spot gold rose as high as $1,349.80 per ounce, its eighth record in the past two weeks.

The US dollar on black market yesterday also rose by VND170 to VND19,750-19,850 while bank exchange rates remained unchanged at VND19,500 per dollar.

Domestic gold prices set new record

HA NOI — Domestic gold prices soared yesterday to a new record of VND33 million per tael (US$1,690), an increase of VND1.4 million ($72) per tael over Tuesday's price, as speculators created a run on gold shops.

A tael is equivalent to 1.2 ounces.

The gold-selling districts in Ha Noi and HCM City were thronged with people and saw prices change at least four times in the morning, with Sai Gon Jewelry Co (SJC), Sacombank Jewelry Co, Bao Tin Minh Chau, Agribank Jewelry Co and Phu Nhuan Jewelry Co quoting buy/sell prices at VND32.85/33 million.

Domestic gold prices have increased by over 24.4 per cent since January, when prices stood at about VND26.5 million ($1,360).

SJC's Ha Noi director, Luu Quang Dien, agreed, adding, "Many big trades are made by phone and the supply is limited, so the company has to select familiar customers to whom to sell."

Rumours were rife on the gold market last week that supplies were falling short of demand and that gold prices would continue to set new record highs,so State Bank of Viet Nam Governor Nguyen Van Giau attempted to counter the rumours and blamed any rises in prices on speculation rather than a gold shortage.

"With this kind of sensitive item, our policy is not to completely ban gold imports, but gold companies are not permitted to import any volume they want," Giau said.

On the global market yesterday, spot gold rose as high as $1,349.80 per ounce, its eighth record in the past two weeks.

The US dollar on black market yesterday also rose by VND170 to VND19,750-19,850 while bank exchange rates remained unchanged at VND19,500 per dollar. — VNS

Sunday, January 9, 2011

High gold price fails to deter shoppers

Photo: AFP

Demand for gold jewelry on the domestic market has not significantly changed despite the fact that the cost of gold has climbed to its highest ever level, according to industry experts.

"In recent days, we have had a large number of customers across the country," said General Director of Bao Tin Minh Chau Joint Stock Co Vu Minh Chau.

Chau added that as the wedding season approached, his company had seen no change in customer volume.

Sai Gon Jewelry Holdings Co (SJC) reported business had remained unchanged.

"The number of people buying wedding jewelry still remains high. However, the number of customers shopping for everyday jewelry is down 20 percent," said Tran Thi Ngoc Suong, head of SJC's Jewelry Department.

To maintain customer volume, gold companies have designed a variety of new products comprising less gold.

"Our company has introduced many new products. We cut down the gold weight so that more customers can afford them," said Chau.

He added that with only about VND1 million (US$52), customers could buy a wedding ring.

"We use modern technology, which helps us produce light weight gold jewelry," he added.

The company has also organized a number of discount promotional programs.

These new methods seem to be working for the gold companies, attracting large numbers of mid-income earners.

"It is a clever choice to buy cheaper wedding jewelry with good design when the gold price is so high," said Van Anh, a customer.

The price of gold on the domestic market has significantly increased. It climbed to VND31.64 million ($1.600) per tael (1.2 troy ounces) on Monday.

Saturday, January 8, 2011

High gold price fails to deter shoppers

Demand for gold jewellery on the domestic market has not significantly
changed despite the fact that the cost of gold has climbed to its
highest ever level, according to industry experts.

"In recent days, we have had a large number of customers across the
country, " said General Director of Bao Tin Minh Chau Joint Stock
Company Vu Minh Chau.

Chau added that as the wedding season approached, his company had seen no change in customer volume.

Sai Gon Jewellery Holdings Company (SJC) reported business had remained unchanged.

"The number of people buying wedding jewellery still remains high.
However, the number of customers shopping for everyday jewellery is down
20 percent," said Tran Thi Ngoc Suong, head of SJC's Jewellery
Department.

To maintain customer volume, gold companies have designed a variety of new products comprising less gold.

"Our company has introduced many new products. We cut down the gold
weight so that more customers can afford them," said Chau.

He added that with only about 1 million VND (52 USD), customers could buy a wedding ring.

"We use modern technology, which helps us produce light weight gold jewellery," he added.

The company has also organised a number of discount promotional programmes.

These new methods seem to be working for the gold companies, attracting large numbers of mid-income earners.

"It is a clever choice to buy cheaper wedding jewellery with good
design when the gold price is so high," said Van Anh, a customer.

The price of gold on the domestic market has significantly increased.
Yesterday afternoon, it climbed to 31.64 million VND (1.600 USD) per
tael (1.2 troy ounces)./.

Saturday, January 1, 2011

Gold hits new high in Vietnam

Gold hits new high in Vietnam Gold rose to a record high in Vietnam this week as the metal continued to advance on the global market due to a negative economic outlook.

The price of gold surged to VND31.35 million a tael on Wednesday, compared to VND30.22 million a week before. It fell slightly to VND31.19 million on Thursday morning. A tael is equal to approximately 1.2 ounces of gold.

On the world market, gold hit a lifetime high of US$1,313.45 an ounce on Wednesday as the dollar dropped against a basket of currencies due to expectations the US Federal Reserve would take new measures to shore up the US economy.

Analysts said economic outlook concerns have increased the appeal of gold as a safe-haven asset.

Nguyen Thi Cuc, deputy general director of Phu Nhuan Jewelry Company, said the demand for gold was high on Wednesday. In the morning alone, her company sold 860 taels of gold, more than double the amount it bought.

Saigon Jewelry Holding Company, Vietnam’s largest gold trader, reported sales of 2,000 taels on Wednesday morning.

Gold traders said many local investors bought a lot of gold as a stop loss strategy fearing that prices could go up further. Some traders are seeking government approval to import the metal as they say there is pressure on local supplies.

But Do Minh Phu, vice chairman of the Vietnam Gold Business Association, said in an interview published by Tien Phong newspaper Wednesday that there was no real demand for gold.

During a gold hike in November last year there were long lines of people waiting to buy and sell gold. However, over the past few days, this has not been the case, he said.

“Gold prices are definitely driven by speculators,” Phu said.

Vietnam no longer has gold exchanges and the precious metal has already lost its appeal to local investors compared to other investment options, he said.

Phu said there were concerns about a supply shortage after many local gold traders boosted exports this year. But he said a scarcity of gold in Vietnam is unlikely.

The current price gap between local and international gold is around VND300,000 per tael.

As soon as the State Bank of Vietnam allows local traders to import gold, the gap will narrow, Huynh Trung Khanh, vice chairman of the Vietnam Gold Business Association, told Thanh Nien.

He said companies should be cautious if they want to borrow gold from banks and sell it to do business. Even though interest rates on gold loans are low, at around 3 percent, businesses need to consider the fact that gold has risen 32 percent over the past year.

Khanh forecast gold will hit $1,350 an ounce on the global market in the final quarter this year.

Gold is heading for a tenth straight annual advance and is “still some way from displaying the characteristics of a bubble,” Deutsche Bank AG said in a report on Tuesday.

Thursday, December 30, 2010

Speculators cause domestic gold hike

The price of gold on the local market has risen due to possible speculation rather than a supply shortage, according to Nguyen Van Giau, governor of the State Bank of Vietnam (SBV).

The global gold price set new records in the past few days, as did the domestic gold market.

The SBV and the Vietnam Gold Association had kept a close watch on the market in the last few days, and discovered there was no shortage of gold, Giau said, adding that speculation was possibly the cause for the price rise.

Domestic gold prices in August and the first half of September were lower than the world price. But currently the domestic price is VND400,000 per tael higher than the global price.

The SBV was working with other agencies, including the police and market management, to discover the reasons behind the price hikes.

"With this kind of sensitive item, our policy is not to completely ban gold imports, but gold companies are not permitted to import any volume they want," Giau said.

"We are establishing a management framework for gold trading and imports so that it is suitable with a market economy. We will collect ideas from ministries and industries when we complete it."

Nguyen The Hung, general director of the Vietnam Gold Investment and Trading Co, said the gold price on the domestic market would be equal or even lower than the world price if the SBV permitted gold importers to import gold.

However, the government has stopped granting permits for gold imports, which indicates that it no longer considers gold an essential item, according to an expert.

In addition, the higher gold price had not affected people's lives since few people conducted their transactions in gold, he said.

The gold price on the domestic market on Thursday morning fell to VND31.15 million (US$1,597) per tael (1.2 ounces) after it reached a record of more than VND31.3 million ($1,605 USD) per tael on Wednesday, following an upward trend in global gold prices.

On Thursday morning, SBJ gold was also bought and sold at VND31.15 million ($1,597) and VND31.18 million ($1,599) per tael, respectively.

Sai Gon Jewelry Holding Co on the same day bought the precious metal at VND31.14 million and sold it at VND31.18 million VND per tael, a reduction of 130,000 – 170,000 VND against Wednesday.

Most gold shops in Ho Chi Minh City Wednesday raised their price by more than VND700,000 ($21.3) over the previous day’s price to VND31.25-31.36 million per tael.

The global gold price on that day reached an all-time high of $1,313 an ounce on speculation that a global economic recovery would stoke inflation. In Asia, the metal slightly fell to $1,309 an ounce in the morning.

The weakening of the US dollar on the world market has also contributed to the gold price hike, analysts have said.

Speculators cause domestic gold hike