Gold rose for the first time this week on Thursday and the demand for the metal as a hedge against inflation is expected to grow in the next several days.
The price of gold increased to VND26.47 million per tael on Thursday, compared with VND26.32 million on Wednesday. A tael is equal to 37.5 grams.
Annual inflation accelerated to 8.46 percent in February. The government is aiming to hold it below 7 percent in 2010 but some economists said it would be hard to achieve the target.
Saigon Jewelry Holding Co., Vietnamââ‚¬â„¢s largest gold trader, said it had imported six tons of gold since February 5 to lower prices on the global market as ordered by the State Bank of Vietnam.
But analysts said the buying force on the local market was still too strong, leaving the efforts of the central bank to control prices with almost no results.
They said that the amount of gold imported by SJC was not large enough and thus prices were lowered just for a short period of time before investors began purchasing even more, pushing prices up again.
According to SJC, its gold factories are running at full capacity, producing around 600 kilograms of gold every day. However, the gold trader still cannot meet the local demand.
Analysts said the governmentââ‚¬â„¢s decision to close all gold trading floors by the end of March also drove up the demand.
Many trading floors are still running deficits on their accounts and need to buy around a dozen tons of gold to balance the accounts so that they can end their business by the March 31 deadline, analysts said.
Source: Tuoi Tre, TBKTSG