State Bank prepares plan to intervene in gold market

Gold prices fall sharply

On the morning of December 27, 2023, the domestic gold price broke the threshold of 80 million VND/tael, breaking all records. At 9:00 a.m. on December 28, the SJC gold price was listed by DOJI Group at 78.2 million VND/tael for buying; the selling price was 80 million VND/tael. The difference between the buying and selling prices of gold at DOJI was 1.8 million VND/tael. Meanwhile, Saigon Jewelry Company SJC listed the buying price of gold at 78.4 million VND/tael; the selling price was 79.9 million VND/tael. The difference between the buying and selling prices of gold at Saigon Jewelry Company SJC was 1.5 million VND/tael.

However, in just one trading session, this precious metal was adjusted down by 6 million VND, causing investors to lose heavily. As of 4:30 p.m. on December 28, DOJI Group listed the buying price at 72 million VND/tael; the selling price was 77.5 million VND/tael. The difference between the buying and selling price of gold at DOJI was pulled up to 5.5 million VND/tael. At the same time, Saigon Jewelry Company SJC listed the buying price of gold at 74.5 million VND/tael; the selling price was 77.5 million VND/tael. The difference between the buying and selling price of gold at Saigon Jewelry Company SJC was 3 million VND/tael.

Thus, if you buy gold from DOJI Group on the morning of December 28 at VND80 million/tael and sell it in the afternoon of the same day, the investor will lose VND8 million/tael. Meanwhile, the loss of customers of Saigon Jewelry Company SJC will be VND5.4 million/tael.

Investors face the risk of loss

Experts say that the scenario of gold prices skyrocketing and falling freely is not the first time. Explaining this phase difference, experts say that the gold bullion market is a special market, often called an imperfect market. In addition, the difference between buying and selling prices is pushed to a high threshold, causing investors to face the risk of losses.

Economist Nguyen Tri Hieu said that the fact that domestic businesses adjust the buying and selling price difference too high will push the risk onto the buyer. "A difference of only about 300,000 VND/tael between the buying and selling price of gold is reasonable. However, a difference of 500,000 - 1,000,000 VND/tael is high and over 1,000,000 VND/tael is very high," said Mr. Hieu.

Explaining the record buying-selling difference of SJC gold price, Mr. Dinh Nho Bang - Vice President of Vietnam Gold Trading Association - said that with big fluctuations, businesses will list a high buying-selling difference. This is a business technique to help businesses avoid risks.

Ready to intervene in the gold market

Following the Prime Minister 's urgent directive, on the afternoon of December 28, the State Bank issued a statement stating that it will continue to closely monitor market developments and prepare a plan to intervene in the gold market.

According to the State Bank, the reason for the sharp increase in domestic SJC gold bar prices in recent days is mainly due to psychological factors due to the strong increase in world gold prices. However, the price of SJC gold bars increased at a faster rate.

"The State Bank will continue to closely monitor developments in the gold market and be ready to deploy intervention plans to stabilize the gold market.

Source