HCM CITY — The Vietnamese gold bullion market has gone very quiet as it waits on a Government decree vesting management of gold trading in the central bank to take effect on May 25.
|Gold is traded at the Ha Noi-based Bao Tin Minh Chau Jewelry Co. The gold market has been quiet in the run-up to the implementation of the new Government decree tightening control over the market that takes effect on May 25. — VNA/VNS Photo Huu Duyen
Transactions are sharply down while a long-existing difference between domestic and global prices has almost closed.
This happened last week when global prices increased by US$20 to $1,647 per ounce but local rates remained unchanged and sometimes even edged down at around VND42.77 ($2,037) million per tael. (One tael is equivalent to 1.2 ounces).
From a gap of VND1.7 million in mid-March per gramme/tael, it has now narrowed to around VND300,000.
An official from the Sacombank Jewellery Company (SBJ), who declined to be named, said transactions were very low at his company last week.
In the past, he said, whenever world prices changed by around $10 per tael, people would rush to trade.
Nguyen Thi Cuc, deputy director of the Phu Nhuan Jewellery Company (PNJ), said last week her company had offered a slew of promotions, including a cut in prices to VND30,000-50,000 below SJC's levels.
Yet transactions were down by 50 per cent compared to a year ago, she said.
SJC gold too had seen transactions slump, market observers said.
Nguyen Cong Tuong, deputy head of SJC's business office, said only around 1,000 taels were traded per day, much lower than the normal 3,000-4,000 taels.
Analysts said Decree No 24/2012/ND-CP on gold management was the likely reason for the fall in bullion trading.
Speculation had reduced significantly, they said, pointing to the narrowed gap between the world and domestic prices.
Once the decree takes effect, the State Bank of Viet Nam will be solely responsible for producing gold bullion and jewellery, a move expected to get rid of speculation.
Dr Le Tham Duong of the HCM City Banking University expects the decree, if implemented properly, to help relevant agencies manage the gold market efficiently and transparently. — VNS