Gold market key component of inflation fight

February 25, 2011 | 17:00

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Gold is coming into the government’s focus to curb inflation.

illustration photo

It has issued resolution 11/NQ-CP on February 24, 2011 about curbing inflation, stabilising the macroeconomy and ensuring social security.

According to this resolution, in the second quarter of this year the State Bank will have to submit a gold trading management operation plans for gold imports and remove bullion trading from the free market.

At present, along with the reducing of the exchange rate, domestic gold prices dropped slightly and the difference between domestic gold and global gold prices have shrunk.

Gold was being purchased at VND37.6 million ($1,812) per tael and being sold at VND37.7 million per tael at most shops in Hanoi yesterday.

The depreciation of the dong by 9.3 per cent against the US dollar on the streets on February 24 pushed gold prices down by 800,000 VND per tael ($39) from last weekend.

Sacombank Jewelry Company (SJC) was buying gold at VND37.6 million per tael and sold for VND37.68 million per tael in Hanoi. At the same time Hanoi-based Phu Quy Jewelry purchased SJC-brand gold at VND37.6 million per tael and sold at VND 37.73 million per tael.

Nguyen Thi Cuc, deputy general director of Phu Nhuan Jewelry Company (PNJ), said in the buying demand for gold reduced this week.

“PNJ’s sales are nearly balance and the domestic gold price is little higher than global gold prices,” said Cuc.

Experts expected a domestic gold price of VND36.7-37 million be suitable for medium-long term investors, so the current price is quite risk for investors. Gold prices in Vietnam would increase in short-term and likely drop to equivalent with global gold price in any time.

By Hoang Tran

vir.com.vn

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