Since the Lunar New Year holiday, or Tet, domestic gold demand has been slowing down significantly, so traders do not pay attention to gold auctions organised by the central bank like before.

During the last two months, the regular daily sale volume at Saigon Jewelry Company (SJC) has declined to 1,000 taels, equivalent to only 30% of that in 2013, while 2013 sale volume itself was equal to just 60% of that in 2012, said the Saigon Times Daily.

Phu Nhuan Jewelry Company (PNJ) sold about 700-800 taels a day in 2012, 300-400 taels a day in 2013 but only 200-300 taels per day currently.

Since global gold prices have been declining and the differential of 3-7 million VND has remained between global and domestic gold prices for a tael, purchasing gold has become no longer attractive since last year.

Indeed, this year has been observing a 10% rise of gold prices on the global market but only 4% increase on the local price, which discourages many gold investors.

Phan Dung Khanh, head of analysis for Maybank Kim Eng Securities Co told the Daily that the main reason for such a slow increase comes from the weak domestic demand. Moreover, the cash flow has been running into stock market, pushing it up by 17% this year, with certain stocks rising 100% in the last two months.

Gold trading at bank branches is in a downtrend when buying gold for investment or reserve is no longer a tendency, said a deputy general director of a local bank.

Nguyen Ngoc Trong, sales director of Phu Nhuan Jewelry Company, said that the firm will not take part in the next gold auction by the central bank due to high risk of losses. Alternatively, trading with other enterprises and local residents are preferred, he said.

Nguyen Cong Tuong, SJC’s deputy sales director, said the firm would not be bidding in the next gold auctions unless good prices are offered.

In 2013, the State Bank of Vietnam sold 1.82 million taels (69.9 tonnes) of gold during 76 auctions.

The volume was largely sold to credit institutions to help close outstanding gold deposits. Other sales were made to gold firms to meet market demands.

The sales reduced local gold prices to 34.6-34.7 million VND (1,641-1,646 USD) per tael at the end of 2013, down 12 million VND (569.28 USD) per tael, or 24 percent against the year-end in 2012.

Each tael equals 1.2 troy ounces.-VNA