The gold price quoted by Saigon Jewelry Company, the country’s biggest gold trader, Friday slipped VND70,000 to VND17.06 million ($1,024) per tael, or 1.2 ounces.
But it remained $62, or 9 percent, higher than the international price, which was around $798 an ounce Friday.
Local gold traders said the trend was a result of government limits on gold imports, part of its effort to curb the trade deficit, which blew out to $16 billion in the first eight months of this year, according to the General Statistics Office.
“Most gold traders are now out of stock as the central bank stopped granting import quotas in May,” said Nguyen Thi Cuc, deputy director of Phu Nhuan Jewelry Company.
“But since early last month, the amount of gold bought from customers in a day was always higher than what was sold. There were some days where the purchase of gold from customers made up a mere 10-15 percent of the trading volume. So it’s not surprising that gold traders now have a shortage.”
“Vietnam’s gold market doesn’t reflect the international market because of the government’s import and export limits,” Huynh Trung Khanh, a consultant for the Vietnam chapter of World Gold Council, told Thanh Nien Daily.
“Therefore, domestic gold price are set according to supply and demand in the local market, not international prices.
“For example, at the end of June, the domestic gold price was VND700,000-VND800,000 ($42.50-48.50) per tael higher than the international price,” he said.
“But six weeks later, the domestic price was nearly VND1 million ($61) per tael higher than the international price.”
Khanh forecast the international price would surge to $1,000 per ounce by the end of the year.
The Industry and Trade Information Center under the Ministry of Industry and Trade made a similar prediction.
The center has proposed some resolutions to the government to “stabilize the domestic market,” including allowing gold imports when the international price plummets.
The center warned restricting imports of the precious metal could cause similar problems to what occurred between 1997 and 2001, when the country had a shortage of US currency because it was being used to smuggle gold into the country.
The domestic gold price was then also higher than the international price.
Concerns about a fresh outbreak of gold smuggling are growing as the domestic gold price was consistently higher than the international price, analysts said.
Gold and jewelry shops are now eager to buy gold that has uncertain origins to make jewelry in preparation for the end-of-year wedding season.
Reported by Hoang Uy (With input from SGTT) |
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