VN demand for gold strong
Though the gap between domestic Vietnamese and global gold prices continues to widen, there is no letup in the demand for bullion.
On Friday, for instance, global prices fell to US$1,296 (Bt40,249) per ounce or equivalent to 32.9 million Vietnamese dong (Bt49,300) per tael. A tael is about 1.2 ounces.
In Vietnam, despite falling slightly, it stood at 38.5-38.7 million dong, 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 38.5 million dong 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 35-36 million dong.
Tran Thanh Hai, general director of the Vietnam Gold Business Company, concurred with Trong and gave two more possible reasons for the price to fall: the State Bank of Vietnam 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.
