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Question: The domestic gold price has dramatically increased over the past few days, could you please tell us about the cause of the domestic gold price increase?
Answer: It can seen that the complicated fluctuation of domestic gold price is mainly due to the fluctuation of the world gold price, stemming from the two recent incidents: following the announcement by the European Central Bank (ECB) of its bond purchase decision to support the
Eurozone economies in overcoming difficulties of the debt crisis and particularly following the September 13, 2012 announcement by the US Federal Reserve of the third quantitative easing program for supporting the U.S. economy and the pledge of maintaining low interest rates at least until mid-2015, the price of raw materials, gold and other precious metals in the market has shot up unexpectedly. The domestic gold price has increased rather rapidly in parallel with the fluctuation of the world price. In addition, the domestic gold price has also been affected by domestic incidents over the past few weeks.
However, unlike the past, although the world gold price has increased dramatically, the domestic market has not witnessed any “gold shock”. The market supply has increased due to the fact that many investors and citizens bought gold at VND 42 - 43 million/tael in the past, but now, with the expected domestic gold price hike, they are selling a relatively large quantity of gold in the market. Since September 17, the domestic gold price has been on a downward trend in spite of a slight increase of the world price.
The domestic gold market has shown no sign of "gold shock" or gold smuggling, thereby resulting in the stability of the exchange rate and foreign exchange market. This is also the foremost important goal of formulating and implementing Decree No. 24/2012/ND-CP of the Government on the gold trading management.
Q: In response to the fluctuation of the world and domestic gold price, what measures will the SBV takes to stabilize the gold market?
A: In response to the complicated movements of the domestic gold market, SBV has been carrying out various measures to stabilize the gold market, in particular: the SBV issued regulations allowing those credit institutions in face of gold liquidity problem to borrow gold loans; and in supporting the gold market supply, the SBV issued regulations on the management and production of SBV gold bars in order to allow credit institutions and gold corporate traders to convert non-SJC gold bars or to reprocess bent or buckled SJC gold bars into standard SJC gold bars. The SBV issued a document to require the above-mentioned entities to update the actual quantity and types of gold bars in inventory which need to be converted into SJC gold bars.
The SBV will continue to closely monitor the movement of the gold market and take appropriate measures to gradually stabilize the market. The SBV has also advised people to stay calm in gold trading to avoid unnecessary losses.
