Vietnam central bank lowers gold price to cool market fever

The Vietnamese central bank has lowered the price of gold bullion available to the public through five state-owned entities in a move to narrow the disparity between domestic and international prices.

The State Bank of Vietnam (SBV) was offering SJC-branded gold bars at VND78.98 million ($3,107.2) a tael on Monday to four state-controlled commercial banks – Agribank, BIDV, VietinBank, and Vietcombank – and Saigon Jewelry and Germ Stone Co. (SJC), from which end consumers can buy gold directly, excluding fees charged by the five entities.

At Monday’s open, SJC had reduced the price of gold bars by VND500,000-1 million from last weekend to VND80-82.5 million ($3,245.7) a tael for buy and sell, respectively. Later in the day, the company further cut its price to VND77.98-79.98 million a tael at 2:30 p.m.

The gap between buy and sell prices at local retailers has been brought down to VND2 million ($78.64) a tael, half of the gap seen last week.

As such, the gold price in Vietnam has declined by around VND11 million ($432.8) from last Wednesday (May 29), hours before the SBV announced that it would sell gold to locals via the four aforementioned banks.

Compared to an all-time high of VND92.4 million ($3,636) a tael early last month, gold prices in Vietnam have declined by VND11.4 million. The difference between prices in Vietnam and the world has also been narrowed to VND7-8 million a tael, down considerably from the peak of VND20 million ($786).

The four commercial banks have stated that they will sell gold to local buyers without a profit from their branches in Hanoi and Ho Chi Minh City. However, they will not purchase the metal from sellers.

SJC, meanwhile, will sell as well as buy gold from local sellers. SJC has an ample network with over 200 shops and 43 authorized agents, including 36 shops allowed to trade SJC gold bars.

To prevent money laundering, the SBV requires buyers to provide their identities when buying gold.

The SBV, which abruptly stopped gold auctions because they had failed to narrow the price gap, has said it will continue to proceed with a roadmap to narrow the domestic-international divide.