The State Bank of Vietnam (SBV) plans to auction 16,800 taels of SJC gold bars at 10 a.m. on April 22. Each transaction lot is 100 taels and the deposit rate is 10%. The reference price to calculate the deposit value is VND81.8 million per tael and the step price is VND10,000/tael.
Reference price 81.8 million VND/tael, what will the bidding price be?
Speaking to VietNamNet reporter , gold expert Tran Duy Phuong said that the auction volume of 16,800 taels of gold bars on April 22 will solve the supply for the market. At the same time, the price difference between SJC gold bars and world gold prices will be shortened.
“Before the news of the gold bar auction, the gold price in the market in recent days has not shown an upward trend because it has affected psychology, many people are reluctant to buy. Therefore, with the auction volume of nearly 17,000 taels, the market may have difficulty absorbing all of it,” said Mr. Phuong.
With the reference price given by the State Bank of Vietnam at VND81.8 million/tael, Mr. Phuong predicts that the bidding price will be around VND82.5 million/tael.
The reason analyzed by Mr. Phuong is that in the free market, the buying and selling price is at 82.7-83.2 million VND/tael. Many businesses are still buying SJC at 82.5-82.6 million VND/tael, so there is no reason why they should not buy at the bidding price of 82.5 million VND/tael.
“The winning bid price of 82.5 or 82.7 million VND/tael is an acceptable market price. Businesses only buy the exact amount they need, which they have sold before, and do not speculate on gold,” the expert said.
Also sharing with VietNamNet, Mr. Huynh Trung Khanh, Vice President of the Vietnam Gold Business Association, advisor to the World Gold Council in Vietnam, said that the quantity of 16,800 taels of SJC gold bars put up for auction by the State Bank of Vietnam early next week is quite stable, the supply will be increased, certainly reducing the difference with the world gold price.
The reference price given by the State Bank of Vietnam is 81.8 million VND per tael - nearly equal to the current market price, which Mr. Khanh assessed as "quite reasonable".
“With the reference price close to the market price given by the State Bank, it is possible that units will bid higher than the floor price by about 100,000-200,000 VND, or about 81.9-82 million VND/tael. Depending on the needs of each unit, they will offer different bidding prices,” Mr. Khanh predicted.
What threshold will SJC gold price decrease to after the auction?
After bidding for nearly 17,000 taels of gold bars, how much will the price of SJC gold decrease?
Answering this question, gold expert Tran Duy Phuong commented that the current domestic price of SJC gold is about 9 million VND/tael higher than the world price. With the market price of over 83 million VND/tael, the standard conversion floor price when imported is about 74 million VND/tael. Moreover, SJC gold must be priced about 4-5 million VND higher than 9999 gold rings.
Therefore, after the auction, if the price of SJC gold decreases, it will only be around 80-81 million VND/tael; it cannot be lower. Unless the world gold price drops sharply by a few hundred USD, SJC gold will be priced below 80 million VND/tael,” Mr. Phuong analyzed.
As for 9999 gold rings, according to Mr. Phuong, when the supply of SJC gold increases, it will affect the price of gold rings.
Observing the market over the past few days, Mr. Phuong said that the price of gold rings of major brands is slowing down and decreasing, although the world gold price is still increasing. Part of the reason is that the price of gold rings is affected by the State Bank's gold bar auction. Many people are waiting for the price of SJC gold, if the difference is not too high compared to gold rings, they will be willing to buy gold bars.
“The gold bar auction has a huge impact on the psychology of those who want to buy gold and those who hold gold, they are quite hesitant. At the same time, it makes the difference between physical gold in general and the world price more reasonable.
If previously the price of gold rings was 5-6 million VND/tael higher than the world price, then it will be only 2-3 million VND/tael higher; SJC gold was 14-15 million VND higher, then it will be only about 7-8 million VND/tael. If this difference is achieved, it will be a great success for the State Bank of Vietnam in bringing the domestic gold price closer to the world price," the expert added.
According to the Vice President of the Vietnam Gold Trading Association Huynh Trung Khanh, the amount of nearly 17,000 taels of gold put up for auction is quite a large number, and after only 5-10 auctions, the domestic SJC gold price will probably reach 76-77 million VND/tael. When the difference with the world price is about 4-5 million VND/tael, the State Bank will no longer need to intervene.
However, according to Mr. Khanh, bidding for gold bars is only a temporary measure. While the monopoly on SJC gold has not been removed and the import of gold bars has not been allowed, the State Bank needs to study allowing gold trading units to import raw gold to make gold jewelry. This solution will partly solve the market supply and this is a better solution for the market in the long term.
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