Vietnam central bank halts gold auctions as price gap remains large

The Vietnamese central bank has announced the suspension of its gold auctions one month after resuming sales of the metal as the disparity between domestic and world prices persists.

The State Bank of Vietnam (SBV) will introduce a new plan to stabilize the gold market as early as June 3, the bank said in an announcement late Monday, without giving further details.

Since restarting sales of SJC-branded gold on April 19 after an 11-year hiatus, the SBV has sold a total of 48,500 taels, equivalent to over 1.8 tons, at nine auctions, with three drawing a blank. The latest auction took place last Thursday with 13,400 taels sold, the highest volume since last month.

The auctions have failed to narrow the price gap between the domestic and global markets. At the close on Monday, the price of the yellow metal at state-controlled Saigon Jewelry and Germ Stone Co. (SJC) was VND87.9-89.9 million ($3,529.3) a tael for buy and sell, respectively.

That price was nearly VND7 million ($275) higher than before the auctions, and VND17 million more than the international level.

On Tuesday, SJC raised its quote by VND500,000 ($19.6) for both buy and sell to VND88.4-90.4 million a tael.

In a move to stabilize the local gold market, the SBV earlier this month announced plans to conduct inspections of gold trading at TPBank, Eximbank, SJC, Doji, Phu Nhuan, and Bao Tin Minh Chau.

In a talk with The Investor, Le Xuan Nghia, a member of the National Financial and Monetary Policy Advisory Council, recommended allowing eligible firms to import gold freely to bring down gold prices and curb smuggling.