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Gold retains shine despite price gap

Update: June, 24/2013 - 10:39
Customers buy gold in HCM City. Although the wide gap between domestic and international gold prices remains, the demand in Viet Nam has not declined. — VNA/VNS Hoang Hai

HCM CITY (VNS)— Though the gap between domestic and global gold prices continues to widen, there is no letup in the demand for bullion.

On June 21 for instance, global prices fell to US$1,296 per ounce or equivalent to VND32.9 million per tael.

In Viet Nam, despite falling slightly, it stood at VND38.5-38.7 million, but people flocked to buy gold bars.

For the Saigon Jewellery Limited Company (SJC), sales that day jumped to nearly 3,000 taels from the normal 700 taels.

For Phu Nhuan Jewellery, sales quadrupled to around 1,500 taels.

Nguyen Cong Tuong of SJC said the fall in the price to VND38.5 million sparked off demand.

Nguyen Ngoc Hanh of Tan Binh District, who was standing in a queue to buy gold bullion at an SJC outlet, said though the domestic price is much higher compared to international rates, she decided to buy a few taels since it is much cheaper than a year or two ago.

Speaking about the increasing number of gold buyers in recent days, Nguyen Ngoc Trong, PNJ business director, said it is a risky business since the global price is very volatile at the moment.

Besides, the gap in prices is likely to narrow significantly after June 30 when banks close gold deposits and return the gold to depositors as ordered by the central bank.

Tuoi Tre (the Youth) newspaper quoted him as saying the price could go down to VND35-36 million.

Tran Thanh Hai, general director of the Viet Nam Gold Business Company concurred with Trong and gave two more possible reasons for the price to fall: the State Bank of Viet Nam could intervene to narrow the price gap, and global prices could continue to drop especially since the US announced plans to reduce the injection of money into the economy.

People buying gold now should be careful and invest in moderation, he warned.

Economist Vu Dinh Anh also said that after June 30, when banks return gold to depositors, there would be a large supply of bullion in the market, causing the price gap to shrink.

After June 30 there would be no more artificial demand in the market, central bank Governor Nguyen Van Binh has said. —VNS


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