The State Bank of Vietnam has hold 35 gold bidding sessions and sold 865,000 taels of gold (equal to 33.3 tons) to local banks since March as a measures to help them repay their depositors and close their gold accounts by the end of this month under SBV order.
Gold prices dance
The gold bidding sessions has resulted in gold price drop. Gold prices have decreased to the lowest within two years, causing the rush to buy gold in the domestic market although the domestic gold prices are still around VND 6 million higher than those in the world market.
Gold prices climbed to VND 37.5 million per tael this morning after falling to VND 34 million yesterday morning, falling from VND 42 million per tael last week.
Saigon Jewelry Company said it had already sold over 10,000 taels of gold bullion in three days June 19, 20 and 21 while Phu Nhuan Jewelry Co (PNJ), another big local gold bullion seller, announced to sell over 1,000 taels of gold bullion last weekend, an increase of 400 taels a day.
PNJ said purchase power was still low compared to previous time as investors still expect gold prices would fall in coming days.
A gold company leader said buyers just simply bought gold because the current prices was lower compared to 2012 when gold was sold at VND47 million per tael and they did not care the big gap between the international and local gold prices.
As other investment channels such as stocks and real estate are unattractive and depositing interest rates are now low investors found gold as a true safe haven.
Deadline for closing gold accounts
Local commercial banks are forced to repay their depositors by then end of June but till now, five or six banks cannot reach the deadline.
A leader from the central bank said that credit institutes announced to finish 95 percent of gold bullion depositing accounts.
At a meeting to review bank sector in the first half of the year, SBV Governor Nguyen Van Binh said banks’ liquidity was stable and the central bank had continuously opened gold bidding sessions for local banks to buy gold to clear debts.
SBV will harshly penalties on banks that don’t pace the deadline for returning gold bullions to depositors and close all gold deposit and loan accounts.
It is unclear how gold bullion market is and the gap between domestic and world gold prices changes after banks finish repaying gold depositing account as they depend on demand not on gold prices in the world market.