Central bank seen intervening in gold trading

January 28, 2013 | 08:40

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The State Bank of Vietnam (SBV) in a draft decision on gold bar trading suggests a possibility of intervening in the gold market by transacting with gold trading organizations.

>> Gold bar trading needs better management

The agency would decide to trade gold in either direct transaction or through auctions. The SBV governor would decide on buying and selling prices of gold bars on the domestic market.

The central bank may also open overseas accounts to import material gold and supplement the nation’s foreign exchange reserve to facilitate gold bar trading in the country.

When the central bank’s intervention is needed, the agency would set up plans to buy or sell gold bars, making clear time, volume, transaction methods and partners.

Concerning the gold market after January 10, a representative of SBV said that gold trading has slowed down.

Although gold balance arising from gold purchasing and selling activities of credit institutions at the end of the day is regulated not to exceed 2 pct of the owner’s capital, the actual figures are under 1pct.

People earlier rushed to sell gold, narrowing the gap between local and international prices. However, some banks have increased gold buying to prepare for gold account closing, making gold demand surge again and widening the price gap to over VND3 million for a tael.

The central bank will not intervene in the market now but if public demand kept increasing, the agency would sell out gold to stabilize the market, he said.

The world gold price is around VND3.3 million lower than domestic prices for a tael. A week ago, the difference was just VND2.6 million.

SGT

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