A three-year-old low in New York gold prices has provoked a rush for the precious metal in Viet Nam, sparking a price surge last weekend.
On Friday, the buying and selling rates of bullion declined to roughly VND34 million and VND35 million per tael respectively, the lowest since November 2010. A tael is 1.2 ounces.
At the auction conducted by the State Bank of Viet Nam on Friday, credit organisations quickly bought 40,000 taels.
However, gold prices returned to the threshold of VND37-38 million per tael on Saturday, due to increased demand in the market.
Long queues were seen in front of some major gold shops in HCM City and Ha Noi, causing traffic jams.
With demand soaring in the domestic market, prices stood at roughly VND6 million per tael higher than world gold prices on Friday.
Experts said the domestic gold market was not likely to replicate changes in the international market.
However, they did say that the difference between international and domestic prices could drop by VND3 million per tael in the near future.
Vietnamese citizens have chosen to ignore warnings from experts about “complicated” developments in the world and domestic gold markets that makes purchases risky at the moment.
They have said international gold prices could fall to US$800 per ounce, and that demand in the domestic market could also reduce after June 30.
In order to avoid the risk, gold traders have increased the margin between selling and buying prices to between VND700,000 and VND1 million per tael.
Due to limited gold in stock as demand increased suddenly, many customers have agreed to buy gold on paper, which allows sellers to deliver the precious metal next month.
An employee of a gold shop in HCM City said the number of customers on Friday was three times the normal, so there was not enough gold to sell.
Nguyen Cong Tuong, deputy head of SJC Sales Department, told the Sai Gon Giai Phong (Liberated Sai Gon) newspaper that 5,000 taels of SJC gold sold out quickly on Friday, while the company only purchased several hundred taels on the day.
Nguyen Ngoc Trong, trading director at PNJ, also said that roughly 2,000 taels of gold were sold on Friday despite the huge price gap and warning from experts about the risk of buying at this time. â€” VNS