Gold price falling, banks dislike gold deposits

The domestic gold price has been falling continuously in the last week. Meanwhile, commercial banks have turned their back to gold deposits.

The gold price fell by 100,000 dong per tael on January 20 after slightly increasing on the day before, having returned to the price level seen on Monday January 17.

A tael is equal to 1.2 ounces.

Gold was bought at nearly 35.56 million dong and sold around 35.64 million dong at most gold shops as of 11 am Hanoi time.

SJC brand gold was also traded at around 35.65 million dong per tael, a decrease of 70,000 dong per tael over January 19.

Sacombank Jewelery Company (SJC) bought gold at 35.56 million dong and sold at 35.62 million dong per tael.

Meanwhile, Hanoi-based Phu Quy Jewelry purchased SJC-brand gold at 35.55 million dong and sold at 35.65 million dong.

As such, the gold price decreased on four days last week and only increased on one day. In general, the domestic price has been kept at low levels since the beginning of 2011, while 36 million dong per tael remains the biggest resistance threshold which still cannot be broken. Meanwhile, the gap between the purchase and the sale prices is narrow at 40-80,000 dong per tael.

Meanwhile, the international market remains quiet as there is no information that supports the gold prices. Especially, big investment funds have still been pushing up sale.

International newspapers reported that 2428 tons of gold were sold on January 18. Meanwhile, SPDR Gold Trust, the biggest gold investment fund in the world, sold 5464 tons of gold on January 19. As such, the fund has sold nearly 30 tons of gold in total since the beginning of the year.

The massive sale has had big impacts on the world market. The gold price immediately decreased by $3 per ounce yesterday morning, trading at $1369 per ounce.

On the foreign currency market, the US dollar price on January 20 decreased by another 30 dong per dollar in comparison with the day before. The foreign exchange shops on Ha Trung streets in Hanoi quoted the prices at 20,987-21,000 dong per dollar (purchase and sale prices).

Meanwhile, the euro was traded at 27,800-27,900 dong per euro.

Though the domestic gold price has been following the world’s price, gold in Vietnam is still 700,000 dong per tael more expensive than in the world.

Meanwhile, commercial banks have refused long term gold deposits. On January 18, 2011, Asia Commercial Bank (ACB) announced its new interest rate policy under which the bank will not accept long term gold deposits any more (12, 13, 24 and 36 month term deposits). The bank now only accepts 1, 2, 3, 6 and 9 month term deposits with the interest rates of 0.65 percent at the lowest and 1.1 percent at the highest.

Eximbank has also stopped accepting long term gold deposits since January 6, 2011. The bank now only accept 1, 2, 3, 6 month and 364 day term gold deposits, offering very low interest rates of 0.2-1 percent per annum.

The move has been made after the State Bank of Vietnam released Circular No 22 on October 29 on narrowing the scale of gold mobilization and lending.

In related news, on January 18, the Gold Business Council proposed the Ministry of Finance to slash the export tariff from 10 percent to zero percent. The association said that no other country in the world applies such a high export tariff. – Vietnamnet

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