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May 14, 2024 / 17:38

Vietnam c.bank eases gold auction conditions

The minimum bid amount will be reduced from 700 to 500 taels to attract more bidders.

The State Bank of Vietnam (SBV) plans to auction gold with a minimum starting price of VND88 million ($3,457) per tael and reduce the minimum bid to 500 taels.

 Locals buying gold at Bao Tin Minh Chau jewelry shop in Hanoi. Photo: Cong Hung/The Hanoi Times

According to the central bank’s announcement, the sixth gold auction will be held on May 14 to increase market supply.

The reference price for businesses to place deposits is VND88 million ($3,457) per tael. This reference price is currently VND500,000 ($19,64)) per tael higher than SJC's buy-in price from the public yesterday and VND2 million ($78,56) lower than the selling price.

The floor price at which businesses can bid will be announced shortly before the auction. Gold traders indicate that the floor price—the minimum price the SBV intends to sell to businesses—will be equal to or higher than the announced reference price of VND88 million.

In the upcoming auction, the SBV will again adjust the minimum and maximum quantities that businesses can bid for.

The minimum bid will be reduced from 700 taels to 500 taels. The maximum purchase limit will be raised to 4,000 taels, double the previous limit of 2,000 taels. This adjustment is expected to encourage more participants. This week, the SBV plans to hold two auctions, doubling the frequency to increase market supply. In the long term, SBV’s Deputy Governor Pham Thanh Ha mentioned that the bank would propose amendments to Decree 24 on gold market management.

In the past two weeks, the SBV has organized five auctions to increase market supply and cool down domestic gold prices relative to global prices. However, these auctions have been considered unsuccessful.

So far, only 6,800 taels of gold, or 8% of the volume auctioned, have been released to the market. This amount was quickly absorbed by the market, with SJC gold prices rising after each auction.

SJC gold prices on May 13 continued fluctuating following the Deputy Prime Minister's urgent order to inspect the market. Each tael dropped by more than VND3 million ($118) at the opening, then continued to fluctuate throughout the day, stabilizing around VND90 million ($3,535) by the end of the day.

The sixth auction organized by the SBV today [May 14] saw a positive shift in the number of participants and the amount of gold supplied to the market.

Previous auctions were often canceled due to only one participant placing a bid or, at most, two participants winning. However, this morning's auction had eight enterprises winning a total of 8,100 taels of gold (nearly 50% of the 16,800 taels offered). This session recorded the highest winning bid volume, with previous sessions each seeing only 3,400 taels. Thus, through three successful auctions, the regulator has released 14,900 taels of gold into the market.

The winning bid prices this morning ranged from VND87.72 to 87.73 million ($3,446) per tael, which is VND1.7 million ($67) higher than the SJC buying price from the public and nearly VND1.3 million ($51) lower than the selling price.