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CB set for gold market intervention

Update: May, 27/2014 - 08:00
A gold trader on Dinh Tien Hoang street, Ha Noi.Yesterday, SJC-branded gold bars were traded at VND36.65 million/VND36.73 million ($1,740), slightly down from VND36.6 million/VND 36.85 million($1,746) on Saturday. — VNS Photo Truong Vi

HA NOI (VNS) — The State Bank of Viet Nam (SBV) has competent gold bullion storage to intervene and keep the gold market stabilised, if necessary.

This announcement was made by Deputy Governor Dao Minh Tu to local press on Sunday in an attempt to calm the market after the local gold price bounced back late last week, even though the world gold price had dipped slightly.

"The central bank is closely monitoring the gold market. If gold keeps fluctuating, we have enough gold to sell out on a large scale to stabilise the market," Tu claimed.

The strong measures of the SBV since late 2013 successfully fixed the disorder of the local gold market, which included significant price differences between domestic and world gold prices and the impact of speculative activities.

The precious yellow-metal market was rather stable in the first five months of the year: local and world gold prices almost shared similar trends.

However, since May 13, the local gold price has made unexpected moves, once hitting VND37.4 million (US$1,772) per tael. In two weeks, the local gold price increased by 5.4 per cent. One tael is equivalent to 1.2 ounces.

Tu assumed that the sudden increase was in large part due to psychological reasons derived from tensions in the East Sea and speculative activities that made the most of this situation.

The announcement on Sunday was not the first of its kind. Earlier, the SBV had announced the possibility of resuming gold bullion auctions. The latest auction was held on December 28 last year.

Decision makers also warned the public to carefully consider market trends before buying or selling gold so as to avoid unnecessary losses.

Last year, the SBV sold 1.82 million taels, or 70 tonnes of gold bullion, through 76 auctions to keep supply and demand stable in the market.

Yesterday, SJC-branded gold bars were traded at VND36.65 million/VND36.73 million ($1,740), slightly down from VND36.6 million/VND 36.85 million($1,746) on Saturday.

Reuters reported that the world gold price yesterday continued to struggle below $1,300, after ending flat for two straight weeks, but the metal could gain because of developments in Ukraine, where pro-West billionaire Petro Poroshenko notched an emphatic win in the presidential election.

The spot gold price was steady at $1,293.01 per ounce at 0354 GMT, after ending flat for a second straight week. The metal closed between $1,291 and $1,296 in the last seven sessions.

The US dollar was traded at VND21,120–21,170 at commercial banks. — VNS


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