State Bank increases gold bar supply, can it control gold price?

Gold prices are expected to stabilize after a series of policies from the Government and the State Bank. In the photo: gold trading in Ho Chi Minh City at 3:30 p.m. on April 12 - Photo: TTD

Following the Prime Minister's directive, the price of SJC gold bars has evaporated by half a million VND/tael, although the world gold price is still on an upward trend and reached the historical mark of 2,400 USD/ounce at the end of April 12. Meanwhile, the State Bank of Vietnam (SBV) affirmed that it "will increase the supply of gold bars".

State Bank will increase supply of gold bars

Converted according to the exchange rate listed at the bank, the world gold price is equivalent to 72.83 million VND/tael. Thus, compared to the converted world gold price, the price of SJC gold bars is still 11.67 million VND/tael higher while the price of 9999 gold rings is 4.32 - 5.52 million VND/tael higher.

Speaking to the press on April 12, Deputy Governor of the State Bank of Vietnam Pham Thanh Ha said that recently, due to the complicated developments of the world and domestic gold markets, domestic gold prices have fluctuated strongly, increased rapidly, and have a high difference with international prices.

"The State Bank will immediately implement solutions to intervene in the market. For the gold bar market, the State Bank will increase supply to handle the high difference between domestic prices and world prices.

Regarding the gold jewelry and fine art market, the State Bank will continue to create maximum conditions to ensure sufficient raw materials for production activities to export gold jewelry and fine art," Mr. Ha affirmed.

In addition, the State Bank will coordinate with relevant ministries, branches and functional agencies to require businesses to deploy the use of electronic invoices in gold trading transactions to improve transparency and management efficiency.

At the same time, the State Bank will immediately carry out the work of grasping the situation, inspecting and supervising; strictly handling acts of gold smuggling across the border, profiteering, speculation and manipulation of gold prices.

Regarding inspection activities, the State Bank and ministries and branches have established inspection teams and will deploy them this April.

Immediately handle the gold price difference

The above statement of the State Bank was issued after the Government Office issued Notice No. 160 stating the Prime Minister's conclusion at a meeting on solutions to manage the gold market in the coming time.

In this announcement, the Prime Minister requested the State Bank to closely monitor the developments in world and domestic gold prices, proactively and promptly implement solutions and tools to manage the gold market according to regulations.

Timely intervention, immediate handling of the situation of high difference between SJC gold bar price and international gold price. Ensuring the gold market operates stably, healthily, openly, transparently and effectively.

"Handling the gold market developments must put the common interests of the nation and people first and foremost. Encouraging the production and export of gold jewelry and fine art, creating jobs and livelihoods for workers" - the announcement emphasized.

The Prime Minister also requested the State Bank to preside over and coordinate with relevant agencies to urgently implement measures. To closely, effectively and promptly manage and operate the supply for the production of gold bars and gold jewelry, in accordance with market developments.

Waiting for action from the State Bank

Speaking to Tuoi Tre, expert Tran Duy Phuong said that after the Prime Minister's directive and the State Bank's announcement to increase the supply of gold bars, the gold market has reacted.

Accordingly, the selling price of SJC gold bars decreased by more than half a million VND/tael, while the price of 9999 gold rings increased and decreased in some places because the world gold price is still increasing and the gold market is still waiting for specific actions from the State Bank.

"In fact, it can be seen that the market has reacted positively because in the context of the world gold price increasing continuously, at the end of April 12, it reached an all-time peak of 2,400 USD/ounce. If there were no direction from the Prime Minister and the State Bank, the price of SJC gold bars this afternoon could have reached 86 million VND/tael," said Mr. Phuong.

According to this expert, the current market sentiment is to wait for action from the State Bank. During this waiting period, domestic gold prices, especially gold bars, will increase slowly again, narrowing the gap between domestic and world gold prices.

"Domestic gold prices will plummet when two factors come together: when the market has more supply and world gold prices turn to decrease. At that time, holders will also sell," Mr. Phuong analyzed.

Meanwhile, a representative of SJC Company said that on April 12, the number of gold ring purchases was still high. Therefore, the company limited the number of purchases per person to 5 taels of gold rings. However, there were cases where the whole family or many employees of a company lined up to buy gold.

On the selling side, there are also cases of selling 9999 gold rings to take profit but the buying power is still higher. The buying and selling power of SJC gold bars is at a balanced level and not as vibrant as gold rings.

Gold should be auctioned off immediately.

Speaking with Tuoi Tre, Mr. Huynh Trung Khanh, vice president of the Vietnam Gold Trading Association (VGTA), said that there is only one solution that can immediately increase supply for the gold market at this time: gold auctions.

"The State Bank has a large amount of gold in its reserves that can immediately intervene in the market. In December 2023, the State Bank reviewed the entire bidding process, so it can be said that after the Prime Minister's direction, the State Bank is ready to bid," said Mr. Khanh.

According to Mr. Khanh, in the past, during the period of applying Decree 24 on gold market management, the State Bank organized about 80 gold auctions.

When selling this amount of gold to businesses and banks, the State Bank can buy gold on the international market to balance. When the State Bank bids, the price of SJC gold bars will deflate and cannot maintain the current difference.

According to Mr. Khanh, just releasing 5,000 - 10,000 taels of gold per session is enough to cool down the market. This is the fastest solution because importing raw gold takes about a month to be done.

In the long term, Mr. Khanh said that in parallel with gold auctions, the State Bank needs to increase supply to the market by allowing businesses to import raw gold.

In August 2023, the Vietnam Gold Trading Association sent a petition to the State Bank of Vietnam to allow three enterprises including DOJI, SJC and PNJ to import gold in quantity of 1.5 tons/year, divided into several times. Raw gold will be used to make gold jewelry.

However, according to Mr. Khanh, it has been 8 months since the petition was made, so the situation has changed a lot. Therefore, it should not be limited to these three businesses but should be expanded to include large gold businesses in Ho Chi Minh City, Hanoi, Da Nang, etc.

The amount of raw gold each enterprise is allowed to import will be decided by the State Bank, but enterprises will have to balance their foreign currency supply to avoid affecting the market.

Demand for raw gold is about 10 tons

The Vietnam Gold Business Association also proposed allowing businesses to import raw gold to produce gold jewelry according to the provisions of Decree 24. The Association estimates that the demand for imported raw gold to produce gold jewelry will not exceed 10 tons, equivalent to about 700 million USD at current prices./.

Domestic gold prices cool down

Data: ANH HONG - Graphics: T.DAT

According to Tuoi Tre, after the Prime Minister's direction and the State Bank's announcement, the price of SJC gold bars has cooled down.

Gold bars decrease, gold rings increase slightly

At the end of April 12, the selling price of SJC gold bars at SJC Company and PNJ Company both dropped to 84.5 million VND/tael, buying price 82.5 million VND/tael. Compared to the peak in the morning, the selling price of SJC gold bars decreased by 520,000 VND/tael, the buying price also decreased accordingly.

At gold shops, the decrease was stronger, to 83.8 million VND/tael, buying at 82.6 million VND/tael for SJC gold bars.

Meanwhile, the selling price of gold rings continued to increase. At SJC Company, the selling price of 9999 gold rings increased by VND250,000/tael compared to the morning, to VND77.15 million/tael. Compared to April 11, in just one day, the selling price of 9999 gold rings at SJC Company increased by VND1.05 million/tael.

At PNJ Company, the price of 9999 gold rings increased by a total of 850,000 VND/tael, to 77.2 million VND/tael, buying at 75.45 million VND/tael.

The selling price of 9999 gold rings at DOJI Company at the end of April 12 reached 78.35 million VND/tael, buying price 76.25 million VND/tael.

Sellers take profits, buyers hope prices will increase

According to Tuoi Tre on the afternoon of April 12 in Hanoi, the number of customers transacting at some gold shops was not too crowded, there was no waiting in line, and many shops were even deserted.

Ms. T. - a saleswoman at a large gold store in Ha Dong - said that customers mainly came to buy, the amount sold was less. She said that the high price of gold, combined with psychological factors, many people came to buy to stock up. However, the store's supply was still going smoothly, there was no "restriction" or "drop-by-drop selling", Ms. T. shared.

On the contrary, some stores recorded an increase in profit-taking as the number of sellers increased. While many people rushed to buy, hoping that the gold price would continue to increase, many non-professional investors were able to take profits.

Buying and selling at this stage depends on each person's investment perspective. However, it cannot be denied that buying is quite risky when the price of this commodity is at a record level and can "fall" from the peak at any time.

Present at the gold shop on Tran Nhan Tong Street (Hai Ba Trung District), Mr. Trinh Tham (42 years old, Dong Da District) said he came to sell, not to buy. Mr. Tham thought that the price could not increase forever, so he sold. The gold rings he owned were bought when the price was over 60 million VND, and this afternoon they were sold for over 75 million VND.

According to tuoitre.vn

Source: https://tuoitre.vn/ngan-hang-nha-nuoc-tang-cung-vang-mieng-lieu-co-cam-cuong-duoc-gia-vang-20240412225354425.htm

Source