Do countries auction gold to increase supply like Vietnam?

Very few countries bid for gold

Talking to Thanh Nien about the story of gold auctions to reduce the difference between domestic and world gold prices, Mr. Shaokai Fan, Director of Asia-Pacific region (excluding China) and Director of Global Central Bank at the World Gold Council, said that gold auctions rarely happen in other countries.

To increase the amount of gold in the market, countries around the world mainly try to increase domestic supply or import.

"When it comes to bidding, I understand that the central bank bids to supply gold directly to the market. In some countries, the central bank sells gold but in the form of gold coins. For example, on a special occasion, they will stamp a special symbol on the coin and issue it to the outside in the form of selling coins.

The difference in domestic and international gold prices does occur in other countries. However, the difference is not as high as in Vietnam, so the governments of other countries do not intervene as much as in Vietnam to narrow the price gap," Mr. Shaokai Fan emphasized.

Mr. Shaokai Fan mentioned the rare case of gold auction in Türkiye, which occurred in March and April 2023 when Türkiye had a presidential election. Due to concerns about the devaluation of the domestic currency, the demand for gold in Turkey increased dramatically from private investors. The Central Bank of Türkiye decided to sell gold to the market by using its gold reserves, then buy back the gold it sold to replenish its reserves.

When asked how countries usually increase gold supply in the market, Mr. Shaokai Fan shared: In general, there are only two ways, one is to increase domestic supply and the other is to import. There are two ways to increase domestic supply: to promote gold mining and to encourage people to sell gold on the market.

4 factors affecting gold prices in the coming time

Regarding the form of gold trading in different countries, Mr. Shaokai Fan added that most countries require the seller or buyer to prove that they have met certain conditions to be able to conduct gold transactions.

First, it must undergo anti-money laundering checks, or customer due diligence, or background checks on the buyer and seller.

Demand for gold continues to be strong. This is also a factor affecting gold prices in the coming time.

"One way to ensure credibility for buyers and sellers is through bank accounts. So by default, many countries do not use cash to buy gold but often transact through accounts," said Mr. Shaokai Fan.

From the perspective of gold prices, mentioning the main factors that will strongly impact gold prices in the coming time, according to Mr. Shaokai Fan, the first factor is the monetary policy of the Central Bank, specifically from the US.

This is related to the US Federal Reserve's moves to cut interest rates. Sooner or later, they will have to cut interest rates, the question is how much they cut. This will be one of the main factors affecting gold prices.

The second factor is political developments. There are a number of important elections taking place this year. The most important, of course, is the US presidential election in November.

"Suppose, after the US presidential election, there is a change in the administration, it will be less clear what the next US policy will be. Many investors have now increased their gold purchases to hedge against future policy uncertainties," said Mr. Shaokai Fan.

The third factor is the general risk landscape in the world. There are several wars going on right now, and the question is whether these armed conflicts will get worse. It could “escalate,” leading to political instability in many parts of the world.

"The World Gold Council does not forecast gold prices. However, according to the current trend, when the demand for gold continues to be strong, that is also a factor affecting gold prices in the coming time," Mr. Shaokai Fan emphasized.

Source: https://thanhnien.vn/cac-nuoc-co-dau-thau-vang-de-tang-cung-nhu-viet-nam-185240520202654819.htm