Another gold bullion auction has been canceled.

The State Bank of Vietnam continues to cancel gold bullion auctions. (Illustrative image) — The State Bank of Vietnam continues to cancel gold bullion auctions.

The State Bank of Vietnam (SBV) has just announced the cancellation of this morning's gold bullion auction (May 3rd) due to only one bid submitted. The reason for this cancellation is the same as the reason for the cancellation of the auction on April 25th.

This is the third time the State Bank of Vietnam (SBV) has canceled a gold bullion auction. Previously, on April 22, the SBV canceled the first gold bullion auction due to insufficient registered bidders and failure to deposit the required funds.

The second cancellation was on April 25th, due to only one bidder submitting a tender.

The only successful auction on April 23rd saw two bidders win. The total volume of successful bids was 34 lots (equivalent to 3,400 taels of gold). The highest winning bid price was 81.33 million VND/tael. The lowest winning bid price was 81.32 million VND/tael.

In this morning's auction on May 3rd, the total volume of gold bars expected to be auctioned is 16,800 SJC gold bars.

Participating units are required to deposit 10%, with the reference price for calculating the deposit value being 82.9 million VND/ounce. The minimum bidding volume per member is 14 lots (equivalent to 1,400 ounces), and the maximum bidding volume is 20 lots (equivalent to 2,000 ounces).

The bidding increment is 10,000 VND/ounce, and the bidding volume increment is 1 lot (100 ounces). Thus, the regulations on gold auctions remain unchanged compared to the previous three sessions.

Many believe that, because the State Bank of Vietnam has maintained the same conditions for inviting bids, today's trading session is likely to remain sluggish, as the regulations are causing hesitation among businesses and credit institutions.

According to Mr. Dinh Nho Bang, Vice Chairman of the Gold Business Association, the fact that there are too few or no gold bidding entities demonstrates that the regulations on gold bidding still have unreasonable conditions and do not adequately ensure risk mitigation for participating organizations.

If the State Bank of Vietnam revises the bidding conditions to make them attractive enough for businesses to balance the risks, more organizations will participate in gold auctions.

Experts believe that currently, access to capital is a major challenge for many businesses, which partly impacts their decision to participate in bidding when purchasing large quantities of gold. Meanwhile, the State Bank of Vietnam stipulates a minimum of 14 lots, equivalent to 1,400 taels, for successful bids.

Expert Tran Duy Phuong analyzed that while there is a shortage of gold at businesses, it's not a significant one. Therefore, businesses and organizations participating in the bidding process are only aiming to purchase the necessary quantity of gold to meet their business needs.

"For example, if they sold about 1,000 taels last week and were down, they would need to buy 1,000 taels to compensate for the losses and buy a little extra for retail sales or other needs. At this point, they would participate in the bidding process."

"But if they had only sold about 500 taels previously, and the bidding regulations now require a minimum purchase of 1,400 taels, then supply will exceed demand. Therefore, this condition is hindering businesses from participating in the bidding," he said.

At the same time, the expert also stated that currently, gold prices are volatile and risky, and certainly no businesses are buying gold for speculation. Therefore, demand is not very high.

They only need to buy back an amount that is just enough to cover the amount of gold they have sold, or slightly more. “For example, if they are down 1,000 taels of gold, they will buy back around 1,200-1,400 taels. But if they are only down about 500 taels and you expect them to buy back 1,400 taels, that's very difficult.”

"If the State Bank of Vietnam amends the conditions, allowing gold purchases at a level of only 400-500 taels, for example, it will certainly attract more businesses to participate," the expert stated.

Associate Professor Dr. Dinh Trong Thinh suggested that the State Bank of Vietnam should review the reference price. The requirement of a 10% deposit during bidding, while the reference price for the deposit is high, is also a factor that businesses and banks should consider carefully before participating in the bidding process.

"When businesses invest a large sum of money in bidding, they must consider how to make a profit. Therefore, to make subsequent gold auctions more effective, the State Bank of Vietnam needs to determine a reasonable bidding price that suits the needs of businesses, making it easier to attract them," Mr. Thinh said.

TH (according to VTC News)

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