Rise in gold price not due to speculation

Gold trading companies have affirmed that the gold price has been pressing upward over the last few days because of increases in the world market, not because of speculation.

By May 13, the gold price increased by over 1.6 million dong per tael, or 5.3 percent compared to the end of April 2010. The gold market has become active again, though most transactions are purchases and sales have been limited.

According to Saigon Jewelry Company (SJC), the company has been continuously purchasing gold since the beginning of May, with purchase volumes increasing daily. The volume expanded once the world’s gold price hit $1200 per ounce on May 6.

In the first days of May, SJC bought 4000 taels per day, double that of April (2000 taels per day). On May 10, when the domestic price exceeded the 28 million dong per tael threshold and people rushed to sell gold, the company purchased 10,000 taels, the most since Tet.

According to Nguyen Cong Tuong, Deputy Head of the Business Division of SJC, the company is mostly selling gold to banks, not individuals.

According to Tuong, people do not purchase gold while the price is high because they learned from December 2009 and fear that the price may bottom out unexpectedly.

He went on to explain that trading activities have been normal. The gold price has escalated because of the price increases in the world, not because gold trading firms have pushed up prices.

Nguyen Thi Cuc, Deputy General Director of Phu Nhuan Company PNJ, maintained said that there is no reason for speculators to force up prices. Cuc remarked that the world price is still higher by 150,000 dong per tael than the domestic price, while the foreign currency market has been stable.

She added that PNJ purchase transactions have increased since the world price surged to $1170 per ounce in early May. The volume of gold purchased daily by 100 PNJ shops nationwide increased by five times over April.

Several months ago, when the gold price hovered around 26 million dong per tael, many people purchased gold as assets. Now, when the gold price exceeds the 28 million dong per tael threshold, they sell for profit.

Cuc stressed that the company has a profuse supply of gold and that they can satisfy all client demand, even hundreds of taels,

Meanwhile, Nguyen Ngoc Que Chi, General Director of Sacombank Jewelry Company, mentioned that each day the company buys 8000 taels of gold and sells 5000. Chi thinks that the gold price has increased in part due to higher demand for gold to make jewelry.

She claimed that gold companies have resumed jewelry export after they found out that the domestic price is lower than the world price.

“We cannot say that the price increased due to speculation, because we do not lack gold,” Chi added.

SJC’s closing price was 28.07-28.17 million dong per tael (purchase and sale) on May 13. The US dollar price quoted by Vietcombank was 18,990 dong per dollar.

Thoi bao Kinh te Saigon

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