Vietnam’s first gold trading market opened Friday in Ho Chi Minh City.
It is jointly initiated by the Asia Commercial Joint Stock Bank (ACB), the Vietnam Export-Import Bank, Saigon Commercial Bank, and Saigon Jewelry Holding Co.
The bourse, based in the ACB office in district 10, will have a maximum 12 institutional members, all banks or firms licensed to trade gold.
JSC gold will be used for trading in the initial stages. The minimum trading volume is 10 taels (1 tael = 37.5 gm) and price changes are capped at VND5,000 per tael.
Initially, it will be limited to Vietnamese investors who must pay a security deposit of 10 percent of transaction value.
Globally gold slumped to a 10-week low and finished down nearly $10 an ounce in heavy trade Thursday, as a rising US dollar prompted funds and central banks to sell.
Analysts said larger-than-usual gold sales by global banks, particularly the European Central Bank, also weighed on gold prices besides sparking off selling pressure from funds and institutional investors.
Gold futures for June delivery on the New York Mercantile Exchange settled down $9.3, or 1.4 percent, at $653.3 an ounce, after touching a session low of $651.5, the weakest level since March 15.
In Vietnam too the price fell marginally to close at VND12.9 million Thursday.
Earlier this year international gold traders had estimated that gold would end up averaging around $753 in 2007 due to geopolitical tensions and high energy prices. Gold is a traditional hedge.
Nguyen Thanh Truc, deputy chairman of the Vietnam Association of Gold Trading, said the domestic gold market had seen unexpected volatility since mid-April on the back of global movements.
He forecast the precious metal to tumble in the near term as the International Monetary Fund planned to sell 400 tons.
Another 250 tons would be injected into the market by September by EU central banks.
He warned investors to be prudent while investing in gold.
The association has asked the central bank set up a gold bank to keep the country’s gold market in tune with the international bullion business.
The bank would provide support and consultancy for local gold businesses
Vietnam’s demand for bullion, used to produce jewelry, and some other forms of gold, is estimated at some 60 tons this year, up 20 percent against last year.
The central bank has permitted a total of 13 local banks to date to open accounts based overseas for the sole purpose of trading in gold .
Many domestic banks have shown an interest in gold trading as a means to diversify their services to retain a competitive edge as foreign rivals increasingly enter the Vietnamese market.
Source: Thanh Nien
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