Clarifying the Official Gold Market
For many months now, buying SJC gold bars and plain gold rings in Hanoi has been largely a matter of luck. Stores have stopped selling or are selling these two types of gold in very small quantities at irregular times, making it difficult for even those with money to buy.
Sharing with Lao Dong reporter, an employee at a gold shop on Cau Giay street (Cau Giay district, Hanoi) said that for many days now, the shop has regulated that one person can only buy a certain number of round gold rings, because the number of rings is currently very scarce.
There are many reasons for the domestic gold shortage. Experts say that to completely resolve the above situation and help the gold market develop stably and healthily, the authorities must implement many synchronous solutions.
This issue is also expected by voters and people nationwide when the National Assembly will have a question and answer session with Governor of the State Bank of Vietnam Nguyen Thi Hong. Issues in the banking sector will be questioned, including State management of the gold market, foreign exchange market and support for loans and exemption and reduction of interest rates for people and businesses to restore production.
Earlier, in the discussion session at the hall, delegate Nguyen Van Thi (Bac Giang National Assembly delegation) said that credit growth in the first months of the year was low, although the interest rate level had decreased, while the price of gold continued to increase. A large number of people had an unstable mentality, so they chose to buy gold for storage. "The Government should analyze and clearly identify the causes, from which there will be specific, appropriate and effective solutions," said delegate Nguyen Van Thi.
Sharing the same view, delegate Nguyen Danh Tu (Kien Giang province delegation) expressed that the fluctuations in the gold market have a great impact on people's psychology and stabilizing the economy. Accordingly, in 2024, there will be a large difference between domestic and world gold prices. Although the State Bank of Vietnam has had a solution to allow 4 banks to sell gold to people at prices close to world prices to reduce the difference, recently, buying and selling gold on the gold market has had problems such as people having weddings wanting to buy 1-2 taels of gold are very difficult.
Given the above reality, delegate Nguyen Danh Tu proposed to clarify the official and unofficial gold markets and suggested that the Government should have timely solutions to combat goldization, contributing to stabilizing the gold market, operating normally, creating convenience for people in gold transactions as well as stabilizing the macro economy.
Lawyer Truong Anh Tu - Hanoi Bar Association - said that in practice, gold market management still faces many shortcomings. One of the major difficulties is controlling smuggled gold. Smuggled gold is often transported through many different distribution channels, making inspection and detection difficult.
Possible manipulative behavior
In a report sent to National Assembly deputies on a number of issues related to the group of questions raised at the 8th Session, Governor of the State Bank of Vietnam Nguyen Thi Hong said that the gold market has not been truly stable and sustainable, and is still affected by psychological factors and expectations, with potential risks affecting the currency and foreign exchange markets. According to the State Bank of Vietnam, domestic gold prices have fluctuated strongly in the same direction as world gold prices. From the beginning of the year to June, the gap between domestic and world gold prices has widened, especially for SJC gold bars. Fluctuations in domestic gold prices basically depend on developments in world gold prices and supply-demand relations in the market.
On the supply side, from 2014 to 2023, the State Bank did not increase the supply of SJC gold bars to the market. However, since April, the State Bank has intervened in the gold market through bidding and direct sales of gold bars to supplement the supply of SJC gold bars to the market, limiting the impact on the macro economy, currency, and foreign exchange.
On the demand side, the world gold price has been continuously increasing, along with the difficulties of other investment channels (frozen real estate, gloomy corporate bond market, low bank deposit interest rates, etc.) making gold more attractive. However, according to the State Bank, through monitoring by units in the system, the demand for gold is mainly concentrated in Hanoi and Ho Chi Minh City and has psychological and expectation factors.
In addition to the above reasons, the State Bank believes that it cannot rule out the possibility of market manipulation, violations of relevant regulations of the law on tax, competition, etc., leading to the high difference between domestic gold prices (especially SJC gold) and world prices.
The market is still not really stable and sustainable. The State Bank said that in the coming time, the State Bank will consider intervening in the gold market (if necessary) with appropriate volume and frequency to stabilize the market and monetary policy goals. At the same time, it will coordinate with relevant ministries and branches to carry out inspections and checks on the activities of gold trading enterprises, stores, agents distributing and trading gold bars and other entities participating in the market.
