Gold’s movements are unusual
Opening on the morning of April 22, large businesses listed the price of SJC gold bars at 80.3-82.8 million VND/tael (buy – sell), down 1.7 million VND in the buying direction and 1.2 million VND in the afternoon. sold compared to last week’s closing price.
The State Bank’s first auction of 16,800 SJC gold bars in more than a decade was supposed to start at 10 a.m. on April 22. However, an hour before the bidding time, the operator announced the cancellation due to “not enough members registering to bid and transferring deposits” and then rescheduled to March 22.
The information remains unchanged, except for the reference price. Accordingly, the reference price for each amount of SJC gold bars in the auction on April 23 is 80.7 million VND, down 1.1 million VND compared to the reference price of the canceled session.
After this information, the price of SJC gold bars rebounded and increased continuously until today. Currently, the price of SJC gold bars is listed by the company at 82-84 million VND/tael (buy – sell), which is an increase of 1.7 million VND on the buying side and 1.2 million VND compared to the opening price. April 22 – the time when the first bidding session would have been held. The difference between buying and selling is 2 million VND.
In yesterday’s bidding session, 11 businesses participated in the bidding, including 7 banks: VPBank, HDBank, Techcombank, Eximbank, MSB, ACB, Sacombank and 4 businesses including SJC, DOJI, PNJ, Phu Quy, but only 2 applications. The bidders with the winning volume of 3,400 taels of gold were SJC and ACB, corresponding to 20% of the bidding scale. The bidding floor price is 81.3 million VND. The highest winning bid price is 81.33 million VND/tael and the lowest winning bid price is 81.32 million VND/tael.
The first gold auction was held by the State Bank on March 28, 2013. At that time, 1.8 million taels of SJC gold bars were sold on the market, after 76 bidding sessions.
The gold auction was initially expected by experts to be a solution to help the price of SJC gold bars come closer to the world (Photo: Thanh Dong).
Before that, the domestic and world gold markets fluctuated strongly. In early January, at a press conference to deploy the banking industry’s tasks in 2024, Deputy Governor of the State Bank Dao Minh Tu said that domestic and foreign price differences of up to 20 million VND/tael are not accepted.
The Prime Minister also repeatedly issued directives requesting the State Bank to have early market management solutions, including amending or replacing the Decree on gold market management.
This leads to a situation where a part of people are switching from buying SJC gold bars to gold rings as they are waiting for new regulations on whether there is a monopoly on SJC gold bars or ways to intervene to reduce the difference. Gold bar price compared to the world according to the Prime Minister’s direction. There are times when gold rings are in short supply.
Decree 24/2014 on gold management and trading was issued by the authorities with the goal of preventing goldization of the economy. Since then, SJC has been considered a national gold bar brand. The State Bank does not import gold to produce gold bars, causing gold supply to decrease. This leads to the fact that the market at times has an imbalance between supply and demand, world prices have increased slightly, domestic prices have increased very high.
Deputy Governor of the State Bank Pham Thanh Ha then announced that this unit would increase the supply of gold bars, in order to reduce the gap compared to the world.
In fact, in recent times, world prices have fluctuated strongly, at one point reaching a peak, approaching the threshold of 2,400 USD/ounce. Before each period of fluctuation, businesses prevent risks by widening the buying-selling gap to 2-2.5 million VND/tael due to no counterpart source. Having more supply can help them be more proactive and competitive in business, thereby reducing this gap.
Experts talk about gold bidding
The opening of the gold auction was initially expected by experts to be a “fire-fighting” solution, helping SJC gold bar prices move closer to the world.
In fact, in the business sector, some large units focusing on gold bar business include Phu Quy, SJC…, while other units in the market focus on jewelry and fine arts.
The State Bank’s move to auction gold bars will increase the supply of gold bars (Photo: Thanh Dong).
Personal financial investment expert Le Xuan Huy said that in the recent period, people’s sudden increase in demand for buying gold bars for investment and storage has caused the supply of this type of gold to become scarce. That has caused the price of SJC gold bars to increase more strongly than the world gold price and create a large difference, thereby leading to an increased risk of gold smuggling and causing instability in the USD exchange rate.
According to Mr. Huy, the State Bank’s move to auction gold bars will increase the supply of gold bars, making supply and demand in the gold market more balanced. The difference between domestic and world gold prices will decrease, leading to a decrease in gold smuggling. Thus, the exchange rate will become more stable.
However, the State Bank’s gold bar auction activity is only a temporary measure to suppress gold prices because gold is also a reserve tool of the monetary operator. Selling gold also needs to be carefully calculated.
The performance of the State Bank’s gold bar auction on the morning of April 23 did not meet expectations, according to Mr. Huy, possibly because businesses are concerned that Vietnam’s gold price in the short term will decrease according to world gold prices at the same time. Increasing the supply of gold bars can also cause domestic gold prices to decrease.
“Gold businesses have to calculate very carefully before buying gold bars because the profit margin of this business segment is very low. They still want to promote the gold jewelry business with higher profit margins than the gold jewelry business. gold bar business,” Mr. Huy said.
“In the coming time, the State Bank may continue to organize gold bar auctions, but the reference price will continue to decrease to attract more businesses to participate in bidding,” this person commented.
Mr. Nguyen Huu Huan, Lecturer at Ho Chi Minh City University of Economics, said that the successful bidding amount was at 3,400/16,800 taels of gold, which could not solve the problem of market stabilization.
According to Mr. Huan, the auction only has psychological factors, the reference price and bidding price are too high, so it has no effect in helping to reduce the price of the domestic gold market.
“Even if the auction is successful for 100,000 taels, the gold price still cannot be reduced and remains anchored at a high level. Because the auction price is too high, if the organization sells it, it must be higher than the price of 81.32 million VND/tael. And there still has to be a 1-2% profit,” Mr. Huan stated.
The expert commented that the bidding session did not meet the initially set goals. Therefore, in the upcoming auctions, the State Bank should consider reducing the reference price. The reference price is also the reason why the number of members participating in the bidding is small.
