Nghe An market temporarily 'froze' as gold price drops
After news that banks and SJC were selling gold to stabilize prices, gold prices in the market plummeted. In Nghe An, gold trading temporarily stopped.
On the afternoon of June 3, the State Bank announced a plan to sell gold to 4 banks and SJC Company at 78.98 million VND/tael. Accordingly, 4 state-owned commercial banks (Agribank, BIDV, Vietcombank, Vietinbank) and Saigon Jewelry Company (SJC) will sell SJC gold bars directly to people from today according to the previous announcement of the State Bank.
4 State-owned commercial banks will sell at 16 points in Hanoi and Ho Chi Minh City; SJC Company will sell at: 4 points in Hanoi, 4 points in Ho Chi Minh City, 2 points in Ha Long City (Quang Ninh), 2 points in Da Nang City, 2 points in Nha Trang City (Khanh Hoa), 2 points in Ca Mau City (Ca Mau). The remaining cities are: Hue (Thua Thien-Hue), Quang Ngai, Bien Hoa City (Dong Nai), Can Tho, Bac Lieu (Bac Lieu Province), Hai Phong, each locality has 1 point of sale. Banks only sell gold bars to individual customers, not buy. SJC will conduct all transactions as usual.
After the news that banks and SJC sold gold to stabilize the price, the price of gold in the market plummeted. Compared to the closing price of last week, the price of SJC gold bars has now decreased by another 2 million VND/tael, to 77.85 - 79.95 million VND/tael (buy - sell). After a week, the price has "evaporated" 12.5 million VND.
In Nghe An, there are currently no gold bar selling points of banks and SJC company at the price stabilization approved by the State Bank. According to a survey at some gold shops in Vinh city in the early afternoon of June 3, the current price of gold bars has not been updated by gold and silver businesses on the price list.
When customers have a need to make a transaction, gold shops are not interested in advising customers to buy gold bars and direct customers to choose plain round rings.
On the other hand, a gold shop also has no need to buy gold bars. Many shops verbally inform customers that they will temporarily stop trading gold bars, wait for the market to stabilize again and will make a later announcement.
At some gold and silver businesses, the current listed price of gold bars is 79.95 million VND/tael (selling) and 77.85 million VND/tael (buying). However, this business has temporarily sold all the gold bars for sale and only buys.
The price of 9999 plain round rings listed by gold and silver businesses is 72.30 million VND/tael (buy) and 75.80 million VND/tael (sell).
According to records, on the afternoon of June 3, when the information about banks and the SJC system selling gold at stable prices was applied, many people went to gold shops to get information and consult the market.
Ms. Nguyen TN, a gold investor in Vinh city, said: “I just came here to see the specific price of gold, but I have no intention of buying or selling at this time. I bought a quantity of gold when the price was at its highest, 92.5 million VND/tael. At this point, if I sell it, I will lose nearly 14 million VND/tael. The amount of gold I bought is for long-term investment, to accumulate assets while the idle money has not been used for other purposes, so the plummeting gold price also affects my investment and accumulation.”
The price of 9999 plain round rings has only decreased slightly, basically at a stable level, but due to the impact of gold bar prices, currently in gold shops only those who really need it will buy/sell.
“In fact, people are currently listening to the market, waiting for the next developments of the gold market to decide whether to buy or sell. Even those who intend to buy gold jewelry are not in a hurry to buy because they think that if the price of gold bars decreases, the price of processed gold will also decrease. Therefore, in recent days, the gold market has stagnated and today, all transactions seem to be “frozen”, said Ms. Dam Minh Chau, an employee of a gold shop in Vinh city.
Explaining the sharp decline in gold prices last week, Dr. Nguyen Tri Hieu, a finance and banking expert, said that there were many reasons for the sharp decline in gold prices, including the Government's order to inspect all businesses and gold trading establishments to ensure compliance with legal regulations, and to strictly handle violations to stabilize the gold market. Another positive factor causing the sharp decline in gold prices is that the four State banks will sell gold directly to the people.
Commenting on the gold price this week, expert Nguyen Tri Hieu predicted that the SJC gold price will continue to "cool down" compared to last week. However, whether the sharp drop in gold prices can create a premise to reduce the gap between world gold prices and domestic gold prices or not, it is necessary to consider the effect of the commercial banks' selling. Another important thing is that the gap between domestic and world gold prices also depends on the fluctuations of international gold prices.
