SBV to extend Gold auctions to narrow price gap

        Vietnam central bank's latest gold bullion auction witnessed some improvement as 40,000 taels of 37.5 grams each gold bars were sold, the highest volume yet.

The fifth auction held on Wednesday attracted more buyers as bidders, mostly jewelers and banks, paid VND43.3-43.31 million ($2,068) per tael.

The previous highest volume sold was around 26,000 taels in the last two auctions. SJC, Vietnam's largest gold trader, offered a tael at VND43.35 million.

The central bank has so far sold nearly 120,000 taels from the country's reserves in the auctions it started holding in late March The auctions began after jewelers were prohibited from producing gold bullion in last May.

After five gold auctions, SBV sold 118,200 taels, or over 4.4 tons of gold, equal to the amount imported in 2011.

However, domestic gold price immediately fell to the global level after every gold import in the past, but now the local price is still VND3.4 million per tael higher the world’s price, casting doubts over the effect of the gold auctions.

The source from SBV explained the central bank is selling gold at market price, so it is impossible to bring down the local price right away. If SBV sold gold at a low price, it would fuel speculation, he stressed.

Banks have been the main gold buyers in the past auctions given their need to settle gold contracts. “When they no longer have demand for the precious metal, the gold price will certainly go down and the gold market will stabilize,” said the SBV official.

If SBV did not sell gold, the gold price difference would further widen as the deadline for banks to settle their contracts is drawing near, he said. - Bullionstreet