Market gets its head around banks’ move

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There is more than one week before banks have to close their gold position under State Bank requirements, but some banks are dragging the chain.

In the  recent banking sector’s half-year review meeting in Hanoi, State Bank governor Nguyen Van Binh was dissatisfied with banks’ lateness in closing gold positions and gave out the message disobedient banks would incur severe sanctions.

In respect to market perspective after June 30, the deadline for banks to complete closing gold positions, economic expert Nguyen Tri Hieu said: “Some banks may not close their gold positions on schedule. If this happens, they may incur certain sanction measures from the State Bank. Meanwhile, the likelihood the State Bank further extends the deadline would be impossible.”

Former State Bank governor Cao Sy Kiem assumed the gold price in the domestic and world market would come closer after June 30 since the demand for gold would plummet.

“People would prefer hoarding gold since the economy still remains shaky. The price disparity would gradually be pulled down,” Kiem said.

Hieu, however, assumed the State Bank should pump lesser gold amounts into the market after banks close their gold position to ensure stable macro-economy.

In the past months, the State Bank reportedly put nearly 800,000 tonnes of gold into the market to help banks close their gold positions on time.

From the part of gold traders, chairman Do Minh Phu of leading gold and gems group Doji hoped gold traders would become active players in the gold market following Central Bank permission.

“In the long term, the State Bank should honour the right to use certain instruments for risk prevention on gold trading businesses, helping them to become self-reliant with supply sources,” Phu said.