Gold prices dancing, gold deposit interest rates rising

Yesterday the gold price climbed to new heights, approaching the 30 million dong per tael threshold. People once thought that gold price increases would make investors indifferent to gold transactions. But the market has move the opposite way and commercial banks are scurrying to raise gold deposit interest rates.

On September 15, the domestic gold prices changed seven times, closing at 29.78 million dong per tael (a tael is equal to 1.2 oz).

Within seven days, new records have been set, with the latest price higher by 210,000 dong per tael than the previous record and 410,000 dong per tael higher than the price on September 14.

Investors’ belief pushes up gold prices

After the price increased to 29.51 dong per tael on September 8, the gold price has been “dancing” around, but continues escalating. On September 10-13, gold prices went up in the morning, decreased at noon and then climbed to new heights in the afternoon. These were small increases and decreases, at 50,000-80,000 dong per tael.

Gold experts say roller-coaster domestic prices are due to regular changes in the world price. Nguyen Trung Anh, Deputy General Director of Vina Gold Company, believes that gold prices are on the rise because of investors.

“Investors believe that the gold price will surge to $1300 per ounce. Therefore, just a small sign, just as gold purchase of hedge funds, would prompt them to ru and buy gold, thus making prices jump,” Anh explained.

International investors nowadays do not put high hopes in currencies and do not consider them safe shelters, even more reason for gold prices to climb.

The world’s gold price has increased by $150 per ounce in the last two months.

A senior executive of Saigon Jewelry Company (SJC) maintained that the gold price will adjust, because investors may sell gold to profit in the next sessions. Trung Anh agrees that it would be difficult for the world’s gold price to surpass the $1300 mark. However, as investors’ confidence is now very firm, the gold price will not drop sharply when it declines.

When banks raise gold deposit interest rates

Over the last week, some commercial banks have raised gold deposit interest rates. Eximbank, for example, has raised its rate to one percent per annum for one month deposits and 0.8 percent for two and three month deposits.

Asia Commercial Bank (ACB) rates are 0.6-0.7 percent per annum for one month term deposits, 0.8-0.9 percent for two month deposits, and stand very high at 1-1.1 percent for three month deposits.

The move surprised many people. Le Thi Lam Thanh, a gold investor, noted that, in May 2010, she did not dare purchase gold since banks refused to accept gold deposits. Now, banks have made a volte-face.

Banks must offer higher interest rates to retain gold. Because of low rates (nearly zero percent), people withdrew gold, leading to sharp falls in gold reserves.

According to Dat Viet newspaper, a banker admitted demand for loans in gold has increased rapidly, so he must raise interest rates to attract more gold.

Though currently applied interest rates for gold deposits are still much lower than those of early 2010 (four percent per annum), Dr, Le Tham Duong from HCM City Banking University still thinks that it is a good time for gold keepers and a good sign for the national economy.

“If the gold price keeps rising, gold deposit interest rates will climb further, because if banks do not raise rates accordingly, people will withdraw gold to sell for profit,” Duong explained.-Dat Viet

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