2,000 taels sold in first gold auction

Most other firms didn’t bid for the first auction that attracted 21 banks and enterprises due to high prices.

Two corporate winners were Asia Commercial Bank and Phu Quy Jewelry Co., with each registering to buy 1,000 taels at VND43.81 million each. The auction closed at 11:30 a.m. on the same day.

According to a company joining the auction, the floor price applicable to the first session was VND43.81 million a tael, nearly VND400,000 a tael higher than the market price recorded early on Thursday. The central bank didn’t set up the ceiling price for the bidding but the floor price.

Speaking with the Daily, an SBV official said the auction’s floor price was the average price for days. He said the auction was to stabilize the market, not gold prices. For instance, the central bank agreed to increase supply to large volumes whilst trying to set prices properly to secure foreign reserves, he noted.

As gold is not an essential goods, it won’t be sold on the cheap, the official said, adding the central bank will organize another auction if the first bidding is unsuccessful. He insisted that SBV must seek ways to secure foreign reserves instead of considering the benefits of local entities only.

It would be a mistake if local firms pinned high hopes on making profits from selling gold they had bought from the State at prices higher than global prices, he said. And those enterprises that had already sold gold on Wednesday in the hopes of purchasing gold at lower prices on Thursday incurred losses for sure, he noted.

“Scaling down the gap between global and local gold prices cannot be done within an auction. If gold prices continue to fall for many days, prices of the next bidding sessions would stay low, helping pull down local gold prices as a result,” he added.

Gold prices on the local market didn’t go down but increased compared to the closing session on Wednesday. For instance, Saigon Jewelry Holding Co. at 1:30 p.m. on Thursday bought gold at VND43.45 million a tael and sold it at VND43.7 million, VND250,000 a tael higher than gold prices posted the day before.