Gold purchases by retail customers in Vietnam, the world's seventh-largest gold consumer, fell 42 percent year-on-year to 19.3 tons in the April-June quarter, according to the latest World Gold Council report.
Gold bar sales dropped to 16.5 tons, down 45 percent from the second quarter of 2013 while jewelry purchases hit 2.8 tons, down 17 percent.
Vietnamese investors have tended to store gold as a hedge against inflation. However, with an improving economy and slowing inflation, many are seeking to invest in stocks and property or simply to collect deposit interest, Vietnam News Agency quoted Nguyen Thanh Long, Chairman of the Vietnam Gold Traders Association, as saying.
Gold jewelry products on display at a shop in Ho Chi Minh City. Photo: Dao Ngoc Thach
Vietnam’s gold investment market remains under state control, with gold bars auctioned by the central bank at regular intervals.
“2014 has seen a pause in the schedule of the central bank’s gold auctions, causing a supply squeeze that has kept the domestic price premium high at around US$100-150/oz [more than global prices],” the World Gold Council said in its report.
“As a result, interest in chi rings (plain, gold rings with low mark-ups) as an investment proxy remains high and will increase if tight supply conditions persist in the bar market,” the council continued, adding that “unofficial flows continue to supplement the official supply.”
Domestic gold prices stood at VND36.62 million ($1,721) a tael by roughly noon on August 18, up around 5.7 percent compared with early January. A tael equals to 1.2 ounces.
The World Gold Council ranked Vietnam as the world's seventh largest gold consumer last year with 92.2 tons worth $4.16 billion, up 20 percent versus 2012.