A central bank decision allowing local gold traders to import unlimited amounts of gold has brought down prices of the precious metal in the domestic market.
According to traders, a tael of gold lost VND30,000-40,000 on Tuesday, the second consecutive day that prices fell. A tael is approximately equal to 1.2 ounces.
Nguyen Cong Tuong, deputy sales manager at Saigon Jewelry Holding Company, Vietnam's largest gold trader, said many investors decided to sell for fear that resumption of imports would cause prices to drop.
The State Bank of Vietnam last week decided to lift restrictions on gold imports in an attempt to narrow the large gap between domestic and international gold prices. Local traders can import unlimited volumes of gold, central bank governor Nguyen Van Giau said last Friday.
Huynh Trung Khanh, vice chairman of the Vietnam Gold Business Association, said local prices are still higher than the rest of the world because many gold shops have tried to speculate on the precious metal, creating a fake supply shortage on the market.
Local gold demand actually does not grow and the decision to allow gold imports without limits will act as a psychological support to stabilize the market, Khanh said.
Nguyen Thanh Long, general director of Saigon Jewelry Holding Company, said as of Tuesday his company was still waiting for guidelines from the central bank on how much gold it can import and when.
Nguyen Thi Cuc, deputy general director of Ho Chi Minh City-based Phu Nhuan Jewelry Joint Stock Company, said as the gap between domestic and world prices has narrowed to VND350,000 per tael, compared to VND700,000 early this month, gold traders will have to consider carefully their decison on when they should import gold to ensure profitability.