Taking aim to cool a hot gold market

>> Large gold source remains unused amid scarcity

>> State Bank authorises more gold imports as prices soar

On October 6, the State Bank issued Circular 32/2011/TT-NHNN banning commercial banks’ gold mobilisation and lending activities. According to this circular, commercial banks with enough legal conditions will be allowed to transfer a part of the mobilised gold sources into cash and supplement gold supplies in the market. In addition, those banks can also open maximum two offshore gold accounts to prevent gold price fluctuation risks.

A State Bank representative said that this move aimed to narrow the gap between domestic and international gold prices. Until the end of the third quarter, gold prices have increased by 30 per cent quarter on quarter, equal to a increase of VND10million/tael ($480/1.2 ounce).

Together with the move, on October 6, the State Bank also allowed banks to sell gold to customers. Customers can buy gold at trading rooms of Saigon Jewelry (SJC) and five banks DongA Bank, ACB, Techcombank, Eximbank and Sacombank at the listing price set by SJC.

According to former State Bank governor Cao Sy Kiem, those two measures would pull down domestic gold prices to international levels.

“In the long term it is necessary to have an agent under the control of the State Bank to attract and sell gold to market, without speculation,” added Kiem

Sacombank Jewelry Limited Company said that with the intervention measures, domestic gold prices could decrease and come close to world prices. The gap will be narrowed to around VND200,000-400,000/tael ($9.6-19.2/1.2 ounce).

Previously, the State Bank approved the import of gold and announced to continue importing gold to stabilise the market. In September, Vietnam imported gold worth $600 million, raising total import turnover of this metal for the first nine months this year to $1.5 billion, four times higher than the corresponding period last year.