Gold prices continue southwards after central bank announces sales via state-controlled banks

Gold prices in Vietnam continued to plummet on Friday after the central bank announced the sale of gold bullion to end consumers through four state-controlled banks.

State-owned Saigon Jewelry and Germ Stone Co. (SJC) was offering SJC-branded gold bars at VND83-87 million ($3,418) a tael at 3 p.m. on Friday for bids and asks, down from VND85.8-88.8 million at the open.

The wider gap between sell and buy prices indicates that the jewelry major is hedging risks from any developments on global markets and at the State Bank of Vietnam (SBV), the country’s central bank.

At Thursday’s close, SJC quoted the yellow metal at VND86.3-88.8 ($3,489) a tael for buy and sell, down from VND88.3-90.32 million a day earlier.

At this level, gold prices in Vietnam are around VND12.3 million ($483) a tael higher than world prices, significantly lower than a gap of VND20 million at a peak recorded earlier this month.

The SBV on Wednesday announced that it will be selling gold to four state-owned commercial banks – Agribank, BIDV, Vietcombank, and VietinBank – from which citizens will be able to buy the metal from next Monday (June 3).

The move is aimed to narrow the domestic-international price gap after the bank abruptly called an end to auctions through which the SBV injected 48,500 taels, or 1.8 tons, into local companies and banks without succeeding in bringing down the price premium.

The SBV is leading multi-agency inspections of gold trading at TPBank, Eximbank, SJC, Doji, Phu Nhuan, and Bao Tin Minh Chau.

In a Friday statement, Vietcombank said it will sell gold bullion at six branches in Hanoi and Ho Chi Minh City. The bank will not buy gold from customers, it noted.

Representatives from Vietcombank and BIDV have stated that they will sell gold bars to stabilize the local market without a profit.