Strange developments in the gold market

Buy gold freely, lose tens of millions of dong/tael per day

Most opinions believe that after the monopoly is abolished, the domestic gold price in general will drop sharply. However, this has not happened. Precious metals continuously reach peaks and then break peaks, the gap between domestic and world gold prices has not narrowed but has widened. For example, last week, the domestic gold price fluctuated strongly and recorded strange phenomena. After reaching a record price of 154.6 million VND per tael on the first day of the week, the price of SJC gold bars was blown away by nearly 6 - 7 million VND/tael just 2 days later and continued to fluctuate within a wide range of 1 - 3 million VND per tael, which rarely happens. By yesterday, October 25, companies such as SJC, Doji ... increased the price of gold bars by 700,000 VND per tael, to 147.2 million VND for buying, and 149.2 million VND/tael for selling; Bao Tin Minh Chau Company bought at 148.2 million VND, sold at 149.2 million VND; Phu Quy Company bought at 146.7 million VND, sold at 149.2 million VND/tael...

SJC gold bar price drops sharply

PHOTO: DAO NGOC THACH

The price of gold rings at gold trading companies increased from 400,000 - 700,000 VND per tael. Bao Tin Minh Chau Company has the highest price of gold rings in the market when buying at 150 million VND, selling at 153 million VND/tael; Phu Quy Company bought at 146.2 million VND, selling at 149.2 million VND; Doji Group bought at 146.5 million VND, selling at 149.1 million VND; SJC Company bought at 146.1 million VND, selling at 148.7 million VND/tael...

Chart of SJC gold bar price fluctuations from October 19 to 25 (Unit: 1,000 VND/tael)

It can be seen that, just yesterday, the price of SJC gold bars decreased by a total of 5 - 6 million VND per tael, and gold rings decreased by 7 - 7.5 million VND. Those who bought gold bars at the beginning of the week now lost 7 - 8 million VND per tael; and gold rings lost 10 - 11 million VND per tael. Those who bought gold on the free market suffered heavier losses, up to 12 - 34 million VND per tael if they bought gold at the price of 160 - 180 million VND.

Domestic gold is strongly affected by the world's precious metals. Last week, the world gold price fluctuated strongly within the range of 4,000 - 4,380 USD/ounce, at times increasing or decreasing from 50 - 130 USD/ounce in just a few hours. On October 25, the world gold price closed the week at 4,112 USD/ounce. Thus, compared to the peak reached at the beginning of the week, world gold has decreased by 270 USD/ounce, at times losing 340 USD, equivalent to 7.8%. Domestic gold prices are becoming more and more expensive. SJC gold bars are 18.6 million VND/tael higher than the world price, while gold rings are 17.6 - 22.4 million VND/tael higher.

In particular, the price of gold on the online market has dropped equally rapidly. At the Gold Trading Forum, the price of Bao Tin Minh Chau gold rings is being sold at 155 - 156 million VND/tael. As for SJC gold bars, those who have gold are still "shouting" the price up to 166 million VND/tael...

Although domestic prices are much more expensive than the world, gold trading companies still have no gold to sell. A representative of SJC Company said that each person can only buy 1 tael of gold when a customer comes to resell gold. Due to the sharp drop in prices, people bring less gold to sell than in previous days. Bao Tin Minh Chau Company announced that it is temporarily out of stock.

Strange developments

So after 2 weeks the gold market officially abolished the monopoly on gold bars, allowing the import of raw gold, it was thought that the market would be more positive, but strange and unprecedented things happened and lasted for many days. That is, the domestic gold price increased to 20 - 25 million VND per tael instead of shortening the difference; the price of gold rings of Bao Tin Minh Chau Company was higher than the listed price of SJC gold bars; the black market gold market was chaotic with prices appearing at 170 - 180 million VND per tael of SJC gold bars or 160 - 166 million VND per tael of gold rings...

Mr. Huynh Trung Khanh, Vice President of the Vietnam Gold Trading Association, also admitted that the gold market has never seen such strange and unreasonable phenomena as it does now. For example, the price of gold rings of Bao Tin Minh Chau Company is 5 - 8 million VND/tael higher than that of gold bars depending on the time, not only that, the price of buying gold rings is also higher than the price of buying gold bars. Mr. Khanh said that all of this comes from the scarcity of gold in the market. More than 2 weeks have passed but the market still has no official information and supply source. All gold sources bought and sold in the market mainly come from the people. According to the roadmap of Circular 34, companies are currently applying for licenses to produce gold bars, then applying for licenses to import raw gold, as well as establishing a gold import and export limit council... So it will be the beginning of December before there is an import limit and it is likely that by the beginning of next year there will be a unit licensed to import or produce gold bars. That means the market will have supply by then.

"From now until the end of the year, in case the market does not have new supply, the possibility of shocking fluctuations will recur along with unpredictable fluctuations of precious metals in the world market. However, another solution is for the State Bank (SBV) to sell gold intervention like in 2024 through banks and businesses," Mr. Khanh predicted.

Associate Professor Dr. Nguyen Huu Huan (University of Economics , Ho Chi Minh City) further explained that the regulations in Decree 232 or Circular 34 are only necessary conditions, the problem of solving the bottlenecks in the gold market is still mainly supply. Enterprises that want gold must have raw materials for production, if they want to have it, they must import it because Vietnam does not have gold mines. The scarce gold source while the demand is higher, there is a strange phenomenon of people queuing for 3-4 hours just to buy 1 tael of gold. Currently, the market is waiting for the State Bank to grant licenses to enterprises and banks to import and produce gold bars. When the market has a source of goods, the above problems will be solved. According to Mr. Huan, before 2012, Vietnam imported an average of about 50 tons of gold each year. Recently, statistics show that 3 large trading companies account for about 30% of the market, needing about 6 billion USD worth of gold. However, the State Bank of Vietnam will likely not grant such a large limit because the foreign currency source for gold imports could amount to tens of billions of USD.

Increased risk

The domestic gold price has increased sharply recently when the precious metal on the world market has increased but has decreased quite slowly when the world has reversed. Next week, the US Federal Reserve (Fed) will meet on interest rates, in case the interest rate decreases, it will be a factor supporting the increase in gold prices. Domestic prices are not connected to the world when the supply is scarce, which can lead to unpredictable developments of gold at the end of the year. With the free price being higher than in companies by more than 20 million VND/tael, investing or surfing is very risky. Not to mention gold without documents, fake gold... Therefore, people need to be careful when buying gold.

Mr. Huynh Trung Khanh, Vice President of Vietnam Gold Business Association

Source: https://thanhnien.vn/dien-bien-la-tren-thi-truong-vang-185251025181351371.htm