Gold prices in Vietnam Saturday tumbled in respond to a weakening global trend, driving the metal to its lowest level since the mid-December, 2009.
Saigon Jewelry Company Limited, Vietnam's largest gold merchant, announced that gold was sold for VND35.26 million (US$1,809) per tael in Ho Chi Minh City and VND35.28 million in Hanoi as of 8:11 a.m. on Saturday, down VND300,000 from Thursday's close. A tael is equivalent to 1.21 ounces.
Though the lower prices are relatively "attractive", not many people are buying the precious metal, traders said.
Ton The Vinh Quyen, sales director of Sacombank Jewelry Company, said with the dong deposit rates staying high at the moment, people prefer to put their money in the bank rather than buy gold.
"The amount of money that people need to buy a tael can bring VND15,000 in profits per day if they deposit the dong in banks. Therefore, they trend to leave cash in banks," he said.
The central bank has imposed a 14-percent ceiling on dong deposit rates since December 15. However, some commercial banks have offered special bonuses that bring the rates as high as 16 percent.
Gold fell worldwide, on Friday, capping a third straight weekly loss, on speculation that borrowing costs will rise as the economy recovers, eroding the metal's appeal as an alternative investment.
Gold futures for February delivery fell $5.50, or 0.4 percent, to settle at $1,341 an ounce at 1:33 p.m. on the Comex in New York. The metal is down 1.4 percent for the week, after losing 4.3 percent in the previous two weeks.
"Higher interest rates take away the bullish argument that low opportunity costs are supportive for gold," said Tom Pawlicki, an analyst at MF Global in Chicago.