On May 1st, the domestic gold price dropped significantly, following a similar trend in the global gold market. Accordingly, Bao Tin Minh Chau Jewelry Company listed the price of SJC gold bars at 82.6 – 84.65 million VND/tael (buy-sell), a decrease of 550,000 VND/tael compared to the previous day.
Specifically, for gold rings, the company significantly reduced the price by 800,000 VND/tael compared to the previous day, to 73.88 – 75.48 million VND/tael for buy-sell. For the Mi Hong gold system, the price of SJC gold also decreased significantly to 82.2 – 83.7 million VND/tael. Gold rings are listed at 71.6 – 73 million VND/tael.
The price of SJC gold bars is showing signs of cooling down as the global gold price continues to decline. Although the State Bank of Vietnam only sold 3,400 taels of gold in a single auction session on April 23rd, experts believe that the State Bank will continue to hold several more auction sessions, and the downward trend in gold prices will become more evident.
Gold price of SJC bars is expected to decrease significantly in the near future if the State Bank continues to auction gold. Photo: Như Ý
A recent report by the Banking Scientific Research Institute indicates that in the first quarter of 2024, the price of SJC gold and gold rings continued to increase, with the buy-sell price difference remaining high at around 2 – 2.5 million VND/tael.
Although the difference between the domestic gold price and the world gold price has decreased slightly, it still remained at 13 million VND/tael at the end of March. This difference is expected to narrow further, but the price of gold in Vietnam is still increasing rapidly and has reached its highest point in history. Therefore, controlling the gold price remains an urgent requirement.
According to the General Statistics Office, the domestic gold price fluctuates in line with the world gold price. The domestic gold price index in April increased by 6.9% compared to the previous month, 17% compared to December 2023, and 28.6% compared to the same period last year. The average increase in the first four months of the year was 20.7%.
Among the solutions to “cool down” the gold price, the most notable one is the implementation of gold bar auctions.
If the gold supply through auctions reaches a sufficient volume, it will help reduce the domestic gold price in the long run, thus narrowing the gap between domestic and foreign gold prices, as occurred in 2013.
In an interview with PV Tien Phong, Ms. Truong Hoang Diep Huong, an expert from the Banking Scientific Research Institute, stated that the challenge for the State Bank is to balance gold market management with exchange rate control. This is because a low supply will result in only short-term effects.
However, if the State Bank is forced to purchase additional gold from the international market to maintain domestic supply, it will put pressure on the exchange rate.
Exchange rate starts to cool down
Currently, the central exchange rate announced by the State Bank is 24,246 VND/USD. Commercial banks are buying 1 USD at 25,148 VND and selling it at 25,458 VND.
According to the latest report by Phu Hung Securities Company (PHS), as of April 22nd, the exchange rate was around 25,440 – 25,460 VND/USD (buy-sell), an increase of 4.9% compared to the beginning of the year.
According to PHS experts, the exchange rate has cooled down after the State Bank sold foreign currencies to intervene. Selling foreign currencies in the spot market at the present time means that the State Bank is immediately injecting USD into the market and absorbing excess VND.
In addition, the State Bank’s implementation of gold auctions since April 23rd not only helps cool down the domestic gold price but also reduces the “stress” on the exchange rate.
The large difference between the domestic gold price and the world gold price in recent times has stimulated demand for USD on the black market for gold smuggling, thereby putting pressure on the exchange rate.
Therefore, according to PHS experts, implementing gold auctions to increase the gold supply in the market will reduce gold speculation and USD demand.
Speaking at the 2024 Vietnam Economic Forum, Deputy Governor of the State Bank Dao Minh Tu stated that the exchange rate has cooled down.
“The exchange rate is a major issue for the economy. If not managed effectively, it will impact inflation. The State Bank will flexibly manage the exchange rate, keeping it stable but not fixed, and ensuring a zero foreign currency status rather than a negative one.
There are several solutions to achieve this, including regulating the money supply in circulation to maintain balance; managing interest rates reasonably to align with the exchange rate; and calculating an appropriate level to achieve both objectives,” Mr. Tu affirmed.
