Gold demand falls as banks gain time for deposits

November 02, 2012 | 08:20

(0) user say

The demand for gold on the local market tumbles as banks are no longer in a rush to buy the precious metal to spur their liquidity, said the key trader of the benchmark gold SJC.

Nguyen Cong Tuong, deputy sales manager of Saigon Jewelry Company (SJC), said gold trade between last Friday and Wednesday hovered around 600 to 700 taels a day compared to 1,000-1,500 taels a day earlier. A tael equals 1.2 troy ounces.

On Wednesday, however, saw gold trade rise to some 1,000 taels owing to the price fall, he said, adding purchasers on Wednesday were mainly individuals rather than banks, who have slowed their purchase so as not to chase the gold price higher.

Banks in the city shared the view.

Nguyen Thanh Toai, deputy general director of Asia Commercial Bank, said his bank’s gold liquidity has much improved, and is now short of less than 100,000 taels. The bank no longer steps up buying to ease the market demand, as the central State Bank of Vietnam have given banks until June 30 rather than November 25 to attract gold deposits and to buy in so as to ensure their gold positions.

ACB has also cut the interest rate for gold deposits to 0.5 pct a year from the previous 1.4 pct-1.6 pct.

As the demand fell, the gap between local and global gold prices has been narrowed to around 2.6 million a tael compared to over VND3 million that had persisted over the past many weeks.

The local gold price on Wednesday declined to under VND46 million a tael before climbing back to VND46.13 million in the afternoon, while the global price in Europe on Wednesday rose $10.2 to $1,719.1 a troy ounce.

SGT

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional