April 19: Vietnam gold extends rally for fourth day, Dong edges down

Local gold on April 19 extended its rally streak to a fourth day in a row following suit of global gold trend on worry of inflation, the dong fell.

As of 10:00 a.m. Hanoi time, Sacombank-SBJ gold as listed at VND37.26million/tael and VND37.39million/tael for bid and ask, respectively, rising a corresponding of VND60,000 and VND140.

Bid and ask of Thang Long gold bullion, a product of Bao Tn Minh Chau were listed at VND37.23million/tael and VND37.36million/tael for bid and ask, respectively, up VND40,000.

SJC in Hanoi was listed at VND37.28million/tael and VND37.37million/tael for bid and ask, respectively, up VND50,000.

Though the local gold prices rose steadily in the past four days, they are estimated to be VND300,000/tael lower than global gold prices, as a result of the government bullion trade limitation.

World gold settled above $1,493 an ounce Monday after Standard & Poor’s downgraded its credit outlook for the United States and as investors worried about debt in the euro zone and inflation in China.

Spot gold rose as high as $1,497.20 an ounce and was last bid around $1,492 an ounce, against $1,483.75 late in New York on Friday. U.S. gold futures for June delivery settled up $6.90 to end $1,492.90 an ounce.

S&P said it might cut its long-term rating on the United States within two years, prompting investors to buy gold as a hedge against economic uncertainty. The ratings agency cited a risk that policymakers may not reach agreement on a plan to slash the huge federal budget deficit.

“Only precious metals will be seen as attractive in the aftermath of the outlook downgrade. The overall economic outlook becomes more opaque with this; equities and energies will be very much under pressure now,” Kilduff said.

Dennis Gartman, publisher of the Gartman Letter, said gold should keep going higher unless losses on equities or other assets prompt investors to sell the precious metal to meet margin calls.

Gold also gained support from talk that Greece may be forced to restructure its debt and on uncertainty over a bailout for Portugal.

“The debt crisis in the euro zone is capping the euro but is also an argument (to buy) gold as a safe haven,” said Peter Fertig, a consultant at Quantitative Commodity Research.

“If the debt crisis should calm down, interest rate spreads argue for a stronger euro, which would also be a positive factor for gold. From that perspective, gold appears to be well supported.”

Gold also got a boost from concerns about inflation in emerging markets. China raised banks’ required reserves on Sunday for the fourth time this year, extending the fight against stubbornly high inflation.

“It certainly looks as though there are signs that inflation is uncomfortably high within the Asia region,” said RBS analyst Daniel Major. “Gold has a role as a perceived inflation hedge.”

In local official forex market, the dong fell as the State Bank of Vietnam (SBV) eased reference rate to a new all time high of VND20,733 per dollar , up VND5 from Monday. Local banks quoted offer price for dollar at VND20.900 ceiling. – Stoxplus.com

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