The gold price has unexpectedly surpassed the VND13mil/tael ($812.5) threshold. The market has immediately become gloomy due to the overly high prices.
The domestic market saw the gold price dramatically increase late last week, which exceeded the ‘sensitive’ threshold of VND13mi/tael. This is for the first time since May 17 the gold price returned to the VND13mil/tael level. The increase has been attributed to the world’s price increases by $15-16/0z late last week compared to mid week.
On the afternoon of June 3, the gold price listed at the jewellery shops at Ben Thanh market was between VND13,020,000 and VND13,090,000 per tael. The gold price offered by the Saigon Jewellery Company (SJC) on its website was VND13mil per tael. Eximbank’s offered prices proved to be higher than that offered by gold shops, at VND13,100,000 per tael.
However, experts have noted that the quoted price levels did not reflect the real situation of supply and demand as most of bar gold production companies closed for the weekend.
The price hike has made the market quiet. M, the owner of the jewellery shop at Ben Thanh market said that unlike the previous years, people now only purchase gold when the price falls down. She said that she did not receive any clients who sought to buy bar gold in the last two days.
One week before, when the gold price fell down to below VND12,900,000 per tael, the volume of bar gold sold by companies and shops reportedly increased by 20-30%. The gold price decreased on the news that IMF would sell a big volume of gold.However, the trading volume dropped later as soon as the price increased.
The gold price was stabilized in the last two consecutive weeks before at $650-660/oz.
However, the price unexpectedly fell down in the last trading session, soon after the US Government announced the GDP growth rate in the first quarter of 2007, the lowest level since 2002. The greenback has become weaker and devaluated against other hard foreign currencies.
At the same time, US Department of Energy has reported the decline in the oil reserve. The oil price increase and the weaker dollar have both ignited the gold price hike wave.
On the afternoon of June 3, the World’s Gold Council announced the reference price at $671/oz, or $15-16/oz higher compared to two or three days before.
Unlike the domestic market, transactions in the world’s market were very bustling when the price began increasing. The gold price has been continuously fluctuating so far this year, however, it is clear that the deepest lows after every price increase move are higher and higher.
When predicting about the price tendency, Huynh Trung Khanh, Advisor to the World’s Gold Council in Vietnam, said that though the price is on the rise, it is too early to say that the gold price would shoot up in prices. It is not very likely to see the price exceed the $700/oz level.
In a statement released on June 1, the European Central Bank (ECB) has announced it has sold 600 tonnes of gold since the last September and would not sell more gold until this September.
In New York, the gold price has increased by $10/oz in contracts to $670.6/oz for spot delivery contracts, while the contracts for delivery in August saw the price increase of $10.2/oz in the latest trading session. The sharp price increase late last week helped the last week’s price increase by 2.3% over the week before.
Source: VNE
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