VINACHEM

The gold price recently soared by millions of dong per tael within one day and then plummeted the next day, shocking gold investors.

“The gold price soaring dramatically”, “Investors rush to buy gold like mayflies” were headlines that appeared in nearly all local newspapers last week.

The gold market was chaotic last week with people queuing up in front of gold shops amid the worries that the Brexit would push the gold prices up in some days.

The domestic gold price hit the highest peak of VND40 million per tael on July 6, the sharpest increase since October 2014.

Until July 5, 2016, the domestic price had been increasing more slowly than the world’s price increase. But the price suddenly surged on July 5 and 6.

At first, people were calm amid the price increase, but they rushed to buy gold on July 6 after seeing the price skyrocket.

Some gold shops reported that the number of buyers was four times higher on July 5-6 than ordinary days.

People thought the gold price may hit the VND60 million per tael threshold in the future, saying that the gold price in Vietnam must be in accordance with the world’s price.

Meanwhile, the global price is expected to continue to escalate as Brexit may have negative impact on the world economy. Keeping gold could be the safest way to preserve assets amid uncertainties.

The State Bank of Vietnam (SBV) tried to reassure the public that it keeps a close watch over the gold price performance and it will intervene in the market when necessary. With current resources, the intervention is within reach.

One day later the gold price cooled down on July 7. Just within two days, the price soared from VND36 million per tael to VND40 million and then dropped again to VND36 million, causing a shock to investors. The price fluctuations caused losses of VND2-3 million per tael for investors.

Dau Tu cited reports of the largest gold companies including SJC, DOJI and Bao Tin Minh Chau as saying that each of the companies traded 1,000-2,000 taels of gold a day. This means that on July 6-7, the companies sold 6,000-7,000 taels a day at least, and over VND200 billion was pumped into the gold market, which put pressure on the gold supply.

Governor of the State Bank of Vietnam Le Minh Hung on July 8 affirmed that the dong/dollar exchange rate would not be affected by the gold price fluctuation and that the exchange rate remained stable.