On May 9, the domestic price of SJC gold bars reached a new peak: VND89.5 million/tael. Early this morning (May 10), this record was quickly broken when gold skyrocketed by VND1 million per tael, to VND90.5 million.

Meanwhile, the State Bank of Vietnam (SBV) continues to organize gold bar auctions to increase supply to the market. After 5 auctions, there were 2 successful auctions, supplying a total of 6,800 taels of SJC gold to the market.

The question is, why, despite the bidding to increase supply and intervene in the market, the domestic price of SJC gold bars still increased sharply?

The reason why the more bidding, the more SJC gold price increases

Speaking to VietNamNet reporter, Mr. Huynh Trung Khanh, Vice President of Vietnam Gold Business Association, advisor of World Gold Council in Vietnam said that through 5 SJC gold bar auctions, only 2 sessions had winning units with a total of 6,800 taels. From that result, it shows that the gold supply is limited, while the demand is still high, up to tens of thousands of taels per month.

Besides, because the world gold price is forecasted to increase to 2,500-2,600 USD/ounce by the end of the year, people are still buying and storing. Supply is not much, while demand is still increasing, gold bars are becoming more and more rare, leading to higher prices - Mr. Khanh explained.

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The paradox of the gold market, the more bidding increases the supply, the higher the price increases. Photo: Minh Hien

Mr. Khanh said that, taking into account the opinions of experts, the State Bank has adjusted the minimum number of units allowed to bid, from 1,400 taels, to 700 taels. However, as for the reference price for deposit, the State Bank still has the viewpoint of selling at the right price, not below the market price. Therefore, the reference price is higher than the buying price and lower than the selling price of gold trading enterprises.

“The purpose of the State Bank of Vietnam’s gold auction is to create a supply source, but it has not yet achieved the goal of bringing the domestic gold price closer to the world price. Every time the State Bank of Vietnam auctions at 80 million VND/tael, units will buy everything and sell 2-3 times at that price, the price of SJC gold in the market will immediately drop to the same level as the price of gold rings,” said the Vice President of the Vietnam Gold Trading Association.

Meanwhile, economic expert Vu Dinh Anh said that several questions need to be answered: Who is deciding the price of gold in the market? Is it necessary to pull down the domestic gold price?...

“The goal of bringing gold to auction is just one tool, there are many other tools. And to pull the price to where, to pull it closer to the world price, which is currently around 70-71 million VND/tael, or to only have a difference of 5 million VND/tael compared to the world price? The goal must be clear!”, Mr. Anh said.

In addition, Mr. Anh said that at this time, when the price of SJC gold bars increased, the trend of people switched to buying gold rings. This led to a shortage of gold rings in the market to the point that people had to pay money and wait several days to receive gold.

“It is clear that the current scenario of SJC gold bars skyrocketing in price is very beneficial for those who trade in gold rings. Up to now, it has only been said that there is a shortage of supply, so the price of SJC gold has increased, but when bidding to increase supply, the results showed that the market does not need this supply. Is there a problem, is the increase in SJC gold only to facilitate the consumption of gold rings? Why is the management of gold rings loosened, while it is a form of currency? Gold rings are not jewelry gold but a “transformed” form, why is this market neglected?”, Mr. Anh raised many questions.

Experts suggest urgent solutions

Also sharing with VietNamNet, Associate Professor Dr. Ngo Tri Long - economic expert, former Deputy Director of the Institute for Price Market Research (Ministry of Finance) said that gold auctions only sell 20%, "unsold" up to 80% so the supply to the market is still too small. The gap between domestic and world prices increases because of the imbalance between supply and demand. Meanwhile, the reference price for gold auction deposits brings the price close to the market price at the time of the auction.

“In the context of the world gold price trend, there are many forecasts that it will continue to increase. Therefore, if the supply to the market is not increased in time, if the bidding price is always based on the current market price, the domestic gold bar price can reach 90 million VND/tael, which is obvious,” said Mr. Long.

According to this expert, the current market instability is that domestic prices are far from world prices. This has caused a number of consequences such as increased gold smuggling, foreign currency “bleeding”, tax losses, unhealthy economic environment, etc. This instability has led to impacts on the economy.

In the Prime Minister's telegram from the end of 2023, to recent documents of the Government, all require how to stabilize the gold market, including reducing the difference between domestic gold prices and world gold prices. However, currently, the price of SJC gold is still increasing, the difference between the world price is large, up to 16 million VND/tael.

“This forces the State Bank to reconsider, because after 5 bidding rounds, only 2 times the winning bidder… brought the goods to sell but they were “unsold”, meaning they were not successful, and need to consider making changes.
For example, reduce the minimum number of units that can be bid to only 500 taels. In particular, we can consider setting the reference price below the domestic market price, and the specific price will be calculated for each session," Mr. Long suggested.

Along with that, Mr. Long emphasized that the most important thing that needs to be urgently revised and replaced is Decree 24 (on gold market management - PV), which has been discussed for many years but has not yet been implemented.

Gold price today May 10, 2024 increased 'crazily', SJC reached a record peak of 92 million

Gold price today May 10, 2024 increased 'crazily', SJC reached a record peak of 92 million

Today's gold price, May 10, 2024, domestically, SJC gold bars increased by 2.5 million VND per tael in the morning, reaching an unprecedented record high of 92 million VND/tael. In the international market, gold prices reversed and increased vertically, fluctuating around 2,350 USD/ounce.