State Bank of Vietnam intervenes in gold market to address local price disparity
State Bank of Vietnam takes steps to address gold market challenges
Gold holds a special place in Vietnamese culture, often seen as a safe investment during economic downturns. Yet, for the past few years, rapid price increases, large gaps between domestic and international prices, and a lack of structured trading options have made the gold market challenging for Vietnamese investors.
In 2024, global gold prices reached record levels, hitting an all-time high of $2,790 per ounce. Meanwhile, Vietnam domestic gold prices diverged drastically, widening the gap between local and international rates by as much as 15-18 million VND per tael. To address this, the State Bank of Vietnam (SBV) took immediate steps to address the price gap between domestic and global gold rates, such as direct sales through state-owned banks reducing the disparity to around 3-4 million VND per tael.
Vietnam state bank to establish a new gold exchange
Though the price difference persisted, the Governor of the State Bank of Vietnam, Nguyen Thi Hong, has introduced a long-term solution, hinting that a new gold exchange could be established to create a transparent, safer gold market for both individuals and businesses. However, setting up this exchange requires substantial infrastructure and collaboration with various government agencies, as Vietnam relies on imports rather than domestic production to meet its gold needs.
As part of stabilizing efforts, the SBV has focused on selling gold but has not started repurchasing from the public. This decision has spurred concerns, especially since only state banks in Hanoi and Ho Chi Minh City currently sell gold. Some question why the central bank doesn’t offer nationwide access or buy gold back from those looking to sell. Governor Hong responded that fluctuations in gold prices pose risks, and buying gold back at certain price points could result in potential losses if prices later drop. She went on to advise that while gold can be appealing during economic uncertainty, it’s a highly volatile investment and investors should be prepared for significant price changes, even within a single day.
For now, the State Bank plans to closely monitor market conditions, aiming to implement policies that keep gold prices steady for those who see it as a safe haven.
China holds off gold purchases with 72.8 million per ounce in reserves. Some interpret the pause as a response to high bullion prices.
