Several gold trading companies and commercial banks have got the quota for exporting gold from the State Bank of Vietnam. The gold price is climbing to the one-year highest peak since March 18, 2009 with the price quoted on February 22 at between VND 19.73-19.83 million/tael. In both the world and domestic markets, the gold price is being influenced by the speculation.

Companies collecting gold for export

Sunday, February 22, was the bank holiday, but the transactions at gold shops were still bustling. Phu Nhuan Jewellery Company (PNJ) alone reported the high volume of gold traded at between 3,000-4,000 taels, while the figure was just between 200-500 taels on previous Sundays.

Nguyen Quang Huy, Director of the Forex Management Department under the State Bank of Vietnam has confirmed that the central bank has allowed several enterprises to export gold in the last while, but refused to provide the list of the enterprises and the exact export volumes.

Therefore, though the domestic prices keep escalating, companies still buy gold and even collect 18K jewellery gold to make 24K gold. Currently, the domestic gold price is still lower by VND 1 million/tael than the world’s price.

Local newspaper Saigon tiep thi reported that the gold exports in the last month has reached nearly US $1 billion. The decision by the central bank to allow to export gold at this moment is considered a reasonable move, which aims to attract foreign currencies to Vietnam in the context of the high pressure on the VND/US$ exchange rate. The enterprises, which get the export license, have the right to import gold again with the volumes equivalent to the export volumes, when the gold prices go down.

Ly Xuan Hai, General Director of the Asia Commercial Bank (ACB), one of the banks that has the license for gold export, said that Vietnam had imported much gold before, while the gold export now will help raise the foreign currency supplies and narrow the gap between the domestic and the world’s prices.

Big gold traders like ACB or SJC, are reaping large profits from the gold market, from the gap between the domestic and world prices, which has been staying at VND 1 million/tael over the last few days.

The fact that only several enterprises are allowed to export gold to get profit at this moment has made others jealous. The General Director of a commercial bank said that the current policies on gold trading remain unclear and that all enterprises should be allowed to do the business.

People rushing to sell gold

The skyrocketing gold price has prompted people to rush to sell gold out to get profit. The people have estimated that they can profit nearly VND 2 million for every tael of gold. Long queues of people waiting to sell gold have been seen at many gold shops in Hanoi more recently.

A question has been raised that if big gold trading companies are controlling the gold market at this moment. However, Hai from ACB has denied the possibility, saying that no business can be powerful enough to control the market prices and that the prices are being defined by the supply and demand basis.

As of late, there were more sellers than buyers on the market, while gold trading companies were trying to collect gold. This has been explained by the fact that people sold gold when they saw the prices high, while no one dare purchase gold at such high prices.

As there have been more sellers than buyers, the domestic price remains lower than the world’s prices. Besides, the lower domestic price has also been attributed to the profuse volume of gold now being kept among people. According to Huynh Trung Khanh, a gold expert, the volume of bar gold being kept by the public is estimated at 500 tonnes.