Gold prices set fresh record: VND41.55 mln

August 05, 2011 | 22:13
Domestic gold price as of 4:30 pm set a fresh all-time record at VND41.55 million a tael after its world counterpart skyrocketed to $1,667 an ounce.

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It has marked a continuous upward trend for 2 consecutive days even when its international peer remained stable for a while.

The price surged VND300,000 a tael to VND41.4 million a tael after opening the morning session for one hour.

The price gap between domestic and international prices narrowed to as much as VND100,000 a tael from VND200,000 a tael by the end of the morning session.

The price surge may result from international gold price keeping constant rise in Asian and European trading session on Thursday, according to an analysis of Sacombank Jewelry Co (SBJ), an subsidiary of the Ho Chi Minh City- based Saigon Thuong Tin Commercial Bank.

Moreover, further demand in the domestic market is showing signs of recovery, thus backing the rising trend and causing the recent price gap.

World gold prices quickly set a new record of $1,681.9 an ounce last night, but then declining dramatically due to pressure on profit taking. In addition, the stock market also fell sharply, forcing investors to sell gold to cover their losses.

According to reports from analysts, the gold market appeared a sign of reversing in the short term with its bottom at $1,600 an ounce.

But in the long run there are many factors supporting gold prices, particularly the fact that the European Central Bank (ECB) has decided to pump more money into the economy.

A recent monetary analysis report of the Eximbank said a survey of Swiss bank UBS earlier this summer with 80 central banks worldwide showed that they will continue to build up their gold reserves in the next decade.

The level of purchase may increase depending on how well the public debt will be settled and how strong the volatility of their economies will be, the report said.

“So far in 2011, central banks in the emerging markets have already bought more than double the gold they bought in all of 2010, and we’ve got almost five months to go for the rest of the year,” Kitco.com quoted said Jeff Clark, senior precious-metals analyst with Casey Research, as saying.

This buying has occurred despite historically high prices. “So apparently, central banks don’t regard the gold price as too high,” Clark said.

For the year to date, net purchases by the world’s central banks are 203.5 metric tons, which already is a 168 percent increase from 76 tons for all of 2010, Natalie Dempster, director, government affairs, with the World Gold Council, told Kitco.com.

The buying is coming from emerging-market nations that are accumulating foreign-exchange reserves, Dempster reported.

For the year to date, the biggest buyers have been Mexico, 98.8 tons; Russia, 48; Thailand, 26.3; and South Korea, 25.

Many big commercial banks of Vietnam increased the forex rate for US dollar by VND10-20 a dollar today, with the Bank for Investment and Development (BIDV) hiked it the strongest by VND40 a dollar.

They said it was a normal move following market demand.

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