The State Bank of Vietnam (SBV) is postponing gold auctions in the light of the large gap between domestic and global prices of the precious metal.

"The price gap is large but the demand for gold bullion is almost zero. The SBV has no plan yet," Nguyen Ngoc Canh, the newly-appointed head of the Foreign Exchange Management Department, told Vnexpress.

The SBV is the only provider of gold bullion to the domestic market. The Sai Gon Jewellery Company (SJC) on September 24 afternoon posted prices of 35.89 million VND to 36.01 million VND (1,684 USD to 1,690 USD) per tael for gold on its website. At the same time, the spot price for gold on was 1,221.70 USD, down from 1,222.90 USD on September 24.

In an attempt to fan market interest last year, the SBV held 76 auctions and sold a total of 1.82 million taels of gold. However, they have held off on gold auctions since the beginning of this year.

On September 22, and for the first time since June, the SJC quoted a price that was 5 million VND (235 USD) higher per tael than the current world price. One tael is equivalent to 1.2 troy ounces. The gap has been attributed to significant changes in the global market coupled with the slow movement of the domestic market.

"The current prices are absolutely decided by the market," Le Xuan Tung, director of Phu Quy Jewellery Company, told Vnexpress. "Nearly all people come to buy and not to sell. That's why the price of gold remains high," quipped the owner of Kim Hien Gold Shop in Hai Phong city.

Tung revealed that the SVN actually invited Phu Quy to join in gold auctions, but his company declined because of the dull picture for gold in the world market.

Experts said that if the large gap remained, it would produce more pressure on foreign exchange rates and encourage gold smuggling.-VNA