Aug 23: Vietnam gold tops vnd49mln/tael, $60 premium to global prices

Vietnam gold opened up sharply to top VND49 million/tael for the first time in history this morning following a surge in global market but the premium has widen to $60/tael to world gold prices.

As of 9:00 Hanoi time, Sacombank-SBJ gold was listed at VND48.61 million/tael and VND48.99 million/tael for bid and ask, respectively, rising VND0.5 million ($50) a tael.

SJC in Hanoi was listed at VND48.6 million/tael and VND48.92 million/tael for bid and ask, respectively while SJC in the free market was quoted at VND48.6 million-VND49.1 million a tael for bid and ask respectively, up from VND0.6-0.8 million a tael.

Local gold prices are now VND1.3 million/tael or $60/tael or $52/ounce higher than global ones.

On August 22, the State Bank of Vietnam, the country’s central bank, worked with Saigon Jewelry Company (SJC) to work out measures to close the gap between local and global gold prices and improve the correlation between the markets, the local newspaper Tuoi Tre (youth) reported.

“The central bank opined that it will keep intervening the market to make sure local gold prices stick to the world prices and the central bank will not limit gold import quota.” the newspaper quoted an unnamed SJC’s official.

On August 9, the State Bank of Vietnam permitted local companies to buy a combined of five metric tons of gold through August 31, to calm down local gold market and may let businesses import an additional five tons.

It is estimated that Vietnam has to spend around $300 million to import 5 tons of gold, and further gold import will worsen the country’s trade deficit.

In the first 8 months of this year, Vietnam is estimated to incur a trade deficit of $6.22 billion after exporting $60.8 billion worth of goods and importing $67.02 billion worth of goods in the period, the local news service dvt.vn reported, citing GSO.

Earlier in July, the country recorded $1.1 billion trade surplus, the first monthly surplus since March 2009, was mostly backed by the exports of gold.

Global markets:

Spot gold soared to an all-time high above $1,910 on Tuesday, on course for its biggest monthly rise of 17 % since August 1982.

Spot gold gained 0.8 % to strike an unprecedented $1,911.46 an ounce, before easing to $1,909.49 by 0023 GMT.

U.S. gold rose 1.4 % to a record high of $1,917.9, and stood at $1,912.10.

Citi Raises Gold Price Outlook

“Increased global risk, U.S. dollar weakness, growing inflationary fears, the U.S. debt downgrade and continuing sovereign debt risks in Europe have increased investor appetite for gold, triggering recent price strength,” Citigroup said in a note.

The brokerage now sees gold prices of $1,650 per ounce for 2012 and $1,500 per ounce for 2013.It had previously forecast $1,325 per ounce for 2012 and $1,225 per ounce for 2013.

The current bull run in gold could mirror the climb seen in 1980, and prices have increasingly become emotion-driven, said Reuters market analyst Wang Tao.

Despite the recent robust gains in gold prices, expect the rally to continue well into 2012, Paul Sacks, principal gold trader at Aurum Options Strategies told CNBC, adding that “Gold will spend most of next year over $2,000 an ounce”.

Market participants are eyeing an annual central bank conference in Jackson Hole, Wyoming, where the U.S. Federal Reserve Chairman Ben Bernanke is scheduled to speak on Friday.

SPDR Gold Trust Holdings Sells Over 6 Tons of Gold

Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by nearly 6.36 tons to 1,284.40 metric tons by Aug 22 .

SPDR’s holdings’ record-high was 1,320.436 tons on June 29 last year.

Dollar prices

Vietnam’s central bank set the U.S. dollar’s exchange rate at VND20,618, unchanged for 12 days, but local banks raised dollar bids to VND20,820 close to the ceiling price of VND20,824 on expectation of further gold imports. -Stoxplus.com

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