Gold scarcity triggers supply shortage for domestic businesses involved in gold production and processing, pushing gold prices up.
In an effort to increase gold supply in the market and following the Prime Minister’s directive, the State Bank of Vietnam (SBV) organized a gold bar auction on April 23 with a total quantity of 16,800 taels of gold. However, the auction results showed that only 2 out of 11 participating units were successful, with a relatively “modest” quantity of 3,400 taels. This indicates a lack of interest among businesses, resulting in a “slow” sale of 13,400 taels (equivalent to 80%) in the recent auction.
Few businesses dare to “hold” 1,400 – 2,000 taels of gold
The highest winning bid was 81.33 million VND/tael, while the lowest was 81.32 million VND/tael. Meanwhile, the reference price used to calculate the deposit was set at 80.7 million VND/tael, although it was lower than the expected reference price for the gold auction on April 22 by 1.1 million VND/tael. Previously, the reference price for calculating the deposit was 81.8 million VND/tael.
According to SBV regulations, the minimum bid quantity for participation is 14 lots, equivalent to 1,400 taels, and the maximum is 20 lots, equivalent to 2,000 taels. In reality, very few businesses are willing to “hold” 1,400 – 2,000 taels of gold at this time.
A leader of a joint-stock commercial bank said that the bank declined to participate in the SBV’s gold bar auction due to very low profit margins, only about 20,000 VND/chi, so the bank did not want to invest in gold.
This minimum bid level is too high for current market demand. According to estimates, the average daily demand for SJC gold bars in the entire market is around 200-300 taels. The peak day recorded a sales volume of 400 taels – almost the highest since the beginning of this year.
According to Mr. Huynh Trung Khanh, Vice Chairman of the Vietnam Gold Business Association (VGTA) and Advisor to the World Gold Council in Vietnam,
