In the context of recent fluctuation of gold price in the international and domestic markets, Mr. Nguyen Ngoc Canh, Director of Foreign Exchange Management Department of the State Bank of Vietnam (SBV) has granted a short interview about the gold price movement.
Responding to the recent movement of the gold market, Mr. Canh stated that the reason of this movement is mainly due to psychological factor of the market following the UK’s announcement on its withdrawal from the EU. The other reason could be the FED’s delay of its rate hikes. And the investors in the world tend to be risk averse and see gold as the safe haven asset in their portfolio.
Assessing the movement of gold price in domestic market in the recent days, Mr. Canh asserted that the SBV has closely followed the movement of the domestic and international gold markets and seen that the domestic gold price has been in line with the global price movement. However, after the event of Brexit until July 5, the gold price of domestic market increased more slowly than that of the world market. Thus in particular times the domestic gold price was even lower than the world one. Especially, in some days it was VND 800,000 per ounce lower than the world price. The psychology of Vietnamese citizen was less affected by the movement of gold price, as it has been shown via the unremarkable hike of the revenue of gold trading of last week right after the event of Brexit as compared to that of the previous weeks.
From the afternoon of July 5 to July 6, the domestic gold price tended to increase faster than the global one, and the domestic price was higher than the world price. This movement has partly affected domestic market psychology, as many individuals have been waiting for further price increase causing a temporary shortage of the gold supply. In the other hand, the volume of gold trading in the market has not been seen a sudden surge, and there was no evidence of rushing to queue for buying gold as happened in some periods before.
Answering the question about the SBV orientation of gold management, General Director of forex management said that the SBV will closely watch the market movement and be ready for intervening the market if need be. The SBV intervention shall be conducted in consistence with the policy of gold market management of Degree 24/2012/ND-CP of the Government. It is the fact that the implementation of gold market management solutions of the Degree 24 has contributed effectively to stabilizing the gold market, reducing the gold bullion holding, eliminating the gold speculation, preventing the goldernization and economic instability, and controlling the utilization of gold as a payment tool. From February to June, the domestic gold price was lower than that of the world market; the demand of gold buying was 50% lower compared to that amount of the same period of the previous years.
In conclusion, it can be said that the movement in the last days is definitely the temporary fluctuation; not proving any clear movement of the domestic gold price as it is mainly affected by the psychological factor and caused by multidimensional information from the international markets. The specialists have voiced their warning to investors and citizens to be careful with the market movement to avoid losses. The SBV calls on individuals to be more careful in every decision of buying and selling to prevent risks more effectively.
VMH