Vietnam renews pledge to stabilize gold market, fight ‘goldization’

Vietnam Deputy Prime Minister Tran Hong Ha said Thursday that the government will take more decisive steps to stabilize the local gold market.

He noted that the central bank’s direct gold sales have helped bring down prices of the precious metal to a four-month low.

After abruptly stopping gold auctions that failed to bring prices down, the State Bank of Vietnam (SBV), the country’s central bank, started selling SJC-branded gold bars Monday (June 3) to end buyers through four state-controlled commercial banks – Agribank, BIDV, VietinBank, and Vietcombank, and Saigon Jewelry and Germ Stone Co. (SJC).

The SBV sold gold bullion to the four banks and SJC at VND75.98 million ($2,988) a tael Thursday, down VND1 million from Wednesday and VND3 million from Monday.

SJC was offering the metal at VND74.98-76.98 million ($3,027.4) a tael Thursday afternoon, the lowest since late February. From a peak of VND92.4 million a tael last month, the price has dropped VND15 million, or 16.3%.

Compared to the international spot price at Wednesday’s close, gold prices in Vietnam were VND4.2 million ($165) a tael higher, more than two-fold lower than the premium of VND10 million difference on Monday when the five state-run banks started to sell gold directly to local buyers.

The domestic-international price gap has also narrowed considerably from VND20 million ($786.5) a tael early May this year.

The latest price plunge has triggered a local gold rush to sales points of the five entities, but the quantity offered has fallen far short of demand.

Talking about the government’s future actions at a Q&A session Thursday at the ongoing National Assembly sitting, Deputy PM Ha said the government will be more proactive with policy responses to stabilize the gold market and ensure that state management tools are deployed effectively.

The government will amend Decree No. 24/2012/ND-CP, in place since 2012, to match the new context and ensure that the gold market grows in a steady, transparent manner, he said.

The decree will be revised to fight “goldization” of the economy, he added.

“Goldization” refers to the phenomenon of keeping gold as a safe haven asset to hedge against inflation and depreciation of the Vietnamese dong, and using gold as payment instead of the local currency.