Galloping gold prices cause stampede for bank deposit withdrawals

Early this week the price of domestic market gold leaped to around VND49 million ($2,367) per tael and is forecast to hit VND50 million ($2,415) per tael if the world bullion price surpasses $2,000 per ounce.

Skyrocketing world market gold prices prompted local consumers to rush into buying gold despite high risks.

Nguyen Thi Thu Ha, from a Hanoi Maritime Bank branch, said scores of people had come to the branch to withdraw money to buy gold in the past weeks.

“Our sliding deposits were recently attributed to feverish gold prices,” said Ho Chi Minh City-based HDBank deputy general director Dam The Thai.

“Gold emerges as the king investment channel amid stagnant property and securities market. We had to offer more interest to some customers with deposits  over VND500 million ($24,150) at the bank just for them not to withdraw money to buy gold,” said deputy director of a joint stock commercial bank.

Industry experts worried the flow of bank deposits into gold would make the central bank target of easing lending rates to 17-19 per cent, per year in September very difficult.

However, some argued since a number of banks had ample dong currency sources, part of bank deposit flowed into gold trade would not impact on the economy.

National Financial Supervisory Council chairman Vu Viet Ngoan assumed gold price volatility did not influence State Bank’s target of relaxing bank lending rates.

Though gold price impacts on the banking system are yet to be visible, its implications on commodity prices were apparent.

The Ministry of Finance’s Pricing Management Department representative forecast galloping gold prices would result in augmenting prices of most essential goods.

Financial experts assumed gold price upward trend would continue when uncertainties still threaten the world economy.