Asia Commercial Bank, Techcombank, Eximbank, Sacombank and DongA Bank have been authorised alongside Sai Gon Jewelry Co (SJC) to trade in gold bars at quoted global prices in an effort to stabilise the chaotic domestic market for gold.
The five banks will be able to buy gold from and sell it to individual customers at prices announced by SJC, under a decision announced on October 6 by the State Bank of Vietnam.
The measure will help close the gap between domestic and global gold prices and halt speculation and price manipulation, DongA Bank deputy director Nguyen Kim Xuyen told the online newspaper VnExpress.
The gap will more closely adhere to actual changes in supply and demand, suggested Tran Trong Quoc Khanh, director of Asia Commercial Bank's gold trading centre.
The State Bank move had an immediate impact on the domestic gold market yesterday, sending the domestic price down significantly the same day despite increases in the world price.
At 5pm on October 6, SJC posted buy/sell prices of VND43.65 million (nearly $3,000) and VND44.07 million ($2,120) per tael, with one tael equivalent to 1.2 ounces. At the same time, the spot price on the London Bullion Market was $1,652 per ounce.
The domestic price had therefore moved to within about VND1.4 million per tael of the prevailing global price. In late August, SJC and several companies were requested to sell gold in order to ease domestic price pressures, but the result was modest and prices remained high, with the domestic gold price last week exceeding the global price by nearly VND5 million per tael.
Meanwhile, a large volume of gold, estimated at around 100 tonnes, remains idle, on deposit in banks. If the central bank allows commercial banks to sell off these gold deposits, the domestic gold supply will soar and help the nation save foreign currency expended on gold imports.
The central bank should issue gold certificates that could be sold to individuals at prices below market price, discouraging citizens from buying and selling gold on the market, suggested Vietnam Gold Business Co general director Tran Thanh Hai.
The central bank is currently considering a draft decree that will enhance its powers to manage the gold market. Under the draft, the State Bank would retain the power to grant licences to produce gold bars, as well as to permit designated businesses and commercial banks to trade in gold bullion, curtailing the number of individuals and organisations trading gold bars.