April 22: Vietnam gold falls on lending halt, Dong strengthens third day

Local gold on April 22 bucked global trend to trade lower for the first time in 7 days after the news that Vietnam banks will stop lending gold from May 1. The dong rose VND5 again for a third straight day.

As of 10:00 Hanoi time, Sacombank-SBJ gold as listed at VND37.6million/tael and VND37.7million/tael for bid and ask, respectively.

Bid and ask of Thang Long gold bullion, a product of Bao Tn Minh Chau were listed at VND37.49million/tael and VND37.63million/tael for bid and ask, respectively.

SJC in Hanoi was listed at VND37.54million/tael and VND37.62million/tael for bid and ask, respectively.

The move widened the gap between local and global market to over VND400,000 a tael as global gold stayed at fresh record high for a fifth straight day last night in New York supported by a weak dollar, geopolitical uncertainties and inflation concerns.

In Asia trade this morning, spot gold held steady in holiday-thinned trade. Spot gold edged up 0.2 percent to $1,504.99 ounce, off its record high of $1,508.75 hit on Thursday. It was poised to score its sixth consecutive week of gains.

Spot gold rallied over $50, or nearly 4 percent, in the past seven sessions. The Relative Strength Index, or RSI, rose to nearly 74, a level unseen since October last year, suggesting the market has been heavily overbought.

“Gold is likely to consolidate around $1,500 level next week,” said Li Ning, an analyst at Shanghai CIFCO Futures. “The angle of the recent rally is very sharp, and we are bound to see some correction in the near term.”

Li said gold still has more steam to run on and expected prices to peak at $1,550 by the end of the second quarter, on the ongoing Middle East unrest, sovereign debt concerns on both sides of the Atlantic and inflation worries.

Concerns on rising global inflation will likely drive gold even higher in the next few years, albeit in a slower pace, analysts polled by Reuters said.

The Shanghai Gold Exchange has started a trial for over-the-counter trading, providing a convenient tool for institutional clients to trade large quantities of gold.

Holdings in the physically backed exchange-traded precious metals funds dipped ahead of the long Easter weekend. SPDR Gold Trust the world’s biggest gold ETF, saw holdings dip 0.6 tons to 1,229.643 tons.

Singapore and Hong Kong markets are closed on Friday for a public holiday.

In local forex market, the dong was up VND5 against the dollar for a third consecutive day to VND20.925 ceiling after a frenzy dollar selling yesterday in global market. For a long time, local banks sell dollar under ceiling price – Stoxplus.com

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Posted by VBN on Apr 22 2011. Filed under Gold. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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