Challenges remain in stablising gold market in Vietnam
Mon June 03 2024
After nine gold auctions, the State Bank of Vietnam (SBV) will no longer be using the measure to try and stabilise the market but instead introduce other administrative tools next week, says the central bank’s head.
The goal is to reduce the gap between domestic and global gold prices, as well as to increase transparency in gold-market transactions.
Speaking at the socio-economic discussion session on May 29, Nguyen Thi Hong, the governor of the SBV, said that recently, SJC-brand gold prices have experienced significant increases, a trend that has been observed globally across various countries.
The task of narrowing the gap between domestic and international gold prices is extremely challenging, given the continuous and volatile fluctuations in global gold prices, Hong added.
The SBV had previously increased the gold supply to the domestic market through gold auctions, similar to actions taken in 2013, to solve the issue. The expectation was that by increasing supply, the price differential would gradually decrease.
However, after nine auction sessions, the central bank found that the price gap did not decline as anticipated. As a result, the central bank has now decided to halt the gold bidding.
Instead, SBV will directly sell gold to state-owned commercial banks, including Agribank, Vietcombank, BIDV and VietinBank, starting today and the banks will sell gold to the public.
It has also made the decision to establish an inter-agency inspection team.
The team will conduct a comprehensive examination, scrutinising invoices, transaction records and other aspects of the gold market. The purpose is to determine if any unlawful speculative or hoarding behaviours have contributed to the recent volatility in gold prices.
Separately, Deputy Prime Minister Le Minh Khai noted that since June 2022, the government and the prime minister have been providing close oversight and guidance to the SBV regarding the issues in the gold market.
The deputy PM said that to address the gold market issues, a total of 25 policy documents have been compiled so far. These documents include various intervention and stabilisation tools, as well as inspection and control measures.
Looking ahead, the government will be revising regulations to make long-term structural changes.
Nguyen Duc Hung Linh, founder and chief adviser at Think Future Consultancy and Investment, said that the directive to stabilise domestic gold prices will remain in place, though the methods may change.
It’s unclear if the gold-bar auctions will be halted completely after today or be reorganised with different rules, Linh said.
Source: https://www.thestar.com.my