Is the price of gold reaching 80 million VND/ounce within reach?

Speaking with Thanh Nien newspaper this afternoon, May 29th, Huynh Trung Khanh, Vice Chairman of the Vietnam Gold Business Association, suggested that the State Bank of Vietnam's sudden halt to gold auctions likely stemmed from the fact that the auction results did not meet expectations.

With abundant resources and available tools, the State Bank of Vietnam affirms that it has sufficient capability and determination to stabilize the gold market.

"Over a month has passed since the first gold auction, and a relatively large amount of gold has been sold. However, the difference between the price of gold in Vietnam and the world price has not decreased, and has even increased. Before the auction, the price difference was about 10 million VND/ounce, but now, after 9 auctions, the price difference has reached 16-17 million VND/ounce."

Regarding the new market stabilization solution that the State Bank of Vietnam will implement from June 3rd onwards, which involves the State Bank directly selling gold to four state-owned commercial banks for distribution to the market, Mr. Khanh stated that while the method differs from auctions, it is still a solution that contributes to increasing the supply of gold to the market.

The recent gold auctions were unsuccessful, with price being the key factor. Therefore, when implementing a new solution, the most important factors remain the price and quantity sold, and whether there are any quantity limits.

"The closer the selling price of gold to the final buyer is to the world price, the faster the difference between the price of gold in Vietnam and the world price will be reduced. For example, the world gold price is currently around 72-73 million VND/ounce. If the State Bank of Vietnam sells gold directly to four state-owned commercial banks, and then the gold is sold to the people at around 80 million VND/ounce, that's a great result," Mr. Khanh said.

Gold expert Tran Duy Phuong analyzed that the State Bank of Vietnam stopped gold auctions because the auctions were ineffective. While gold auctions did alleviate some of the market's "thirst" for gold, they did not meet the State Bank's expectations or the Prime Minister 's directive to reduce the price difference between domestic and international gold to a reasonable level.

Assessing the new measures taken by the State Bank of Vietnam to stabilize the gold market, Mr. Phuong emphasized: "With the potential and determination of the State Bank of Vietnam, as well as the direction of the Government , the price of SJC gold reaching around 80 million VND/ounce is within reach."

Some economic experts note that there must be clear and strict regulations on how banks sell gold to the public after purchasing gold from the State Bank.

The expectation is that the State Bank of Vietnam will set a reasonable price based on calculations of world gold prices, aiming for the closest possible reflection of the global price. Regarding commercial banks selling gold to the public, the State Bank of Vietnam needs to regulate a certain price margin for commercial banks to adhere to, similar to the exchange rate margin with the US dollar.

In the long run, gold imports will still be necessary.

In the long term, according to Mr. Khanh, the fundamental solution to stabilizing the gold market is to abolish the monopoly and allow gold imports.

Speaking to Thanh Nien newspaper , Shaokai Fan, Director of the Asia-Pacific region (excluding China) and Director of Global Central Banking at the World Gold Council, stated that while Vietnam mines gold, the production is insufficient to meet domestic demand.

Emphasizing that to increase supply, either gold imports are necessary, or people must sell the gold they are hoarding, Shaokai Fan stated: "Given the current strong buying trend, the only way is to import gold to meet domestic demand."

Economist Ngo Tri Long, when discussing the management of the gold market, reiterated his viewpoint, which he has shared with the press many times: the crucial solution that needs to be implemented quickly is to amend Decree 24 on the management of gold trading activities.

A change in management mindset is necessary. The State Bank should only perform its functions, creating a level playing field in accordance with international practices. According to the expert, there should be a variety of gold products, avoiding a single brand. In addition to physical gold, attention should be paid to gold certificates and the use of derivative instruments...

After nine auctions of SJC gold bars, on the evening of May 27, the State Bank of Vietnam announced the suspension of gold bar auctions and will implement an alternative stabilization plan starting from June 3.

Specifically, the State Bank of Vietnam will sell gold directly to four state-owned commercial banks at a price determined by the State Bank based on world prices.

With abundant resources and existing tools, the State Bank of Vietnam has the capacity and determination to stabilize the market. The difference between domestic and international gold prices will be narrowed sustainably and quickly.

Source: https://thanhnien.vn/gia-vang-ve-80-trieu-dong-luong-trong-tam-tay-185240529214540416.htm