Oct 5: Vietnam gold hits new record of VND31.8Mln/Tael, Dollar up

Local gold prices on October 5 set a new record high of VND31.8million/tael this afternoon while dollar prices edged up VND10 in the free market.

On the intraday basis, gold jumped VND200,000 a tael in the afternoon and price volatility forced gold dealers to widen bid and ask spread to mostly VND100,000 a tael to be on the safe side.

On Tuesday, Hanoi’s SJC at 15:00 were listed at VND31.7million/tael and VND31.83million/tael.

Sacombank-SBJ bullion in Ho Chi Minh was listed at VND31.75million/tael and VND31.79million/tael for bid and ask, respectively, up nearly VND200,000/tael from morning quotes.

Local trading was lackluster as investors remained skeptical on price rocket.

In London trade this afternoon, gold rallied to record highs above $1,325 an ounce as the dollar slipped sharply against the euro, with recent volatility in the currency markets boosting demand for the metal as a safe store of value.

Spot gold hit a high of $1,328.05 an ounce and was bid at $1,325.50 an ounce at 0938 GMT, against $1,315.20 late in New York on Monday.

US gold futures for December delivery rose $10.00 an ounce to $1,326.80.

Gold prices appreciated as the dollar tumbled to an 8-1/2 month low against a basket of six major currencies, pressured by broad-based demand for the euro.

Gold is sensitive to moves in the dollar, as weakness in the US unit tends to lift gold’s appeal as an alternative asset and makes dollar-priced commodities cheaper for other currency holders.

“This morning it is a dollar-related move, but it is also the wider currency issues that have been highlighted by an increasing number of commentators,” said Tom Kendall, an analyst at Credit Suisse.

“This morning it was the turn of the Institute of International Finance to talk about currency tensions and the need for some agreement on how to manage pressures between the major currency pairs.”

“You have also had Trichet and Mr Juncker talking about the Chinese renminbi not having appreciated as fast as they would have liked to have seen,” he added.

“All of this tension within the forex world is what is playing into gold.” Gold hit all-time highs in six consecutive sessions to Friday, and after building a base above $1,310 an ounce on Monday rose nearly 1 percent to a new record early on Tuesday.

Analysts will be watching US data later in the week, mainly non-farm payrolls numbers due on Friday, for clues on the next move in the dollar.

Weak data has raised expectations the Fed will take steps to boost the flagging US economy.

Further Easing Eyed

“According to monetary theory, with interest rates at or near historical lows across the OECD world, further easing in monetary policy must take the form of liquidity injections, rather than interest rate reductions,” HSBC analyst James Steel saiin a note.

“In the case of the United States, if increased U.S. dollar liquidity leads to a decline in the dollar, then gold is likely to be a beneficiary.”

Demand for physical gold retreated as prices rose again, however.

Buying in main gold consumer India was muted as the weaker rupee added to pressure on local buyers.

“As (jewellery demand) clearly weakens at the high price level, the dependence on investment demand rises and this is still relatively robust even if the world’s largest gold ETF, SPDR Gold Trust, reported slight outflows again yesterday,” said Commerzbank in a note.

“Net long positions of speculative financial investors recently rose to a 12-month high.

A sharper fall in prices is not on the cards, as gold should profit from the prospect of quantitative easing and as a stable alternative currency.”

Holdings of the world’s largest gold-backed exchange-traded fund, New York’s SPDR Gold Trust, declined for a third session, while those of the largest silver ETF, the iShares Silver Trust dipped from record highs.

In the local forex market, dollar prices edged up at unofficial market while stayed flat official market.

Dollar prices at gold shops set new record of VND19,700 today too. Dollar bid prices were boosted up to VND19,490 and VND19,480 at Vietcombank and Eximbank, respectively while ask prices were all capped at VND19,500.

In global forex market, the dollar jumped against the yen on Tuesday after the Bank of Japan cut interest rates and said it would set up a fund to buy JGBs, corporate bonds, exchange-traded funds and real estate investment trusts. The dollar rose to as high as 83.99 yen from about 83.50 yen beforehand. – Stoxplus.com

Tags: vietnam gold, Vietnam gold market, Vietnam gold prices