The State Bank of Vietnam (SBV) intends to keep up gold auctions to correct imbalances in supply and demand in the domestic market, according to the SBV’s Foreign Exchange Management Department.

From March 28 to December 6 this year, the central bank held 73 auctions in which it offered up 1.88 million taels (one tael equals 1.2 troy ounces).

The auctions managed to inject 1.77 million taels into local credit institutions in a bid to combat speculative activity in the market, minimise gold imports and increase foreign reserves.

Gold auctioning is among a range of policy levers put into action more than a year ago to moderate the gold market.

Director of the SBV’s Foreign Exchange Management Department Nguyen Quang Huy said the policy has significantly improved the imbalance of supply and demand, stablised foreign exchange rates and secured the legal rights of gold holders.

Vietnamese citizens have a long tradition of privately storing gold reserves due to deep-seated problems causing high inflation and depreciations in the VND.

In a bid to wean people off gold holdings and to shore up the dwindling local currency, the SBV shut down gold services in which banks paid interest rates for gold deposits.

Gold holders now have to pay for their storage at banks, with the policy designed to encourage people to covert bullion gold into VND.

Under Government Decree N°24/2012/ND-CP dated April 2012 on gold-related activities, the SBV is responsible for purchasing and selling gold in the domestic market. Gold imported and exported by the central bank are exempt from taxes.

Global price movements

Following the rise of world gold prices, domestic gold prices on December 17 were up around 0.16 percent per tael against December 16.

Buying and selling prices of SJC gold bars listed by DOJI at 5pm December 17 were 35.44/35.49 million VND per tael (1,675/1,678 USD), up around 100,000 VND (4.7 USD) from 35.35/35.43 million VND (1,671/1,675 USD) on December 16.

World gold increased on December 17, supported by a short-covering rally. Spot gold had risen 0.7 percent to 1,245.90 USD an ounce.

According to Reuters, gold has lost over a quarter of its value this year as fears that the Fed will scale back its 85 billion USD monthly bond purchases brought a 12-year bull market to an end.-VNA