Vietnam to allow gold imports to cool local prices

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Vietnam's central bank has authorized at least one domestic firm to import more gold to help cool soaring prices and state-run newspapers said it may open the market to unlimited imports to narrow the gap between local and world quotes.

Central bank officials, including Governor Nguyen Van Binh, could not be reached for an immediate comment, but sources with knowledge of a meeting between Binh and senior editors on Tuesday morning to discuss gold-related policies said the issue of allowing unlimited imports did not come up.

However, the State Bank of Vietnam has agreed to allow Saigon Jewelry Co (SJC), one of the country's biggest gold trading companies, to import gold based on its demand, said Nguyen Cong Tuong, deputy director of sales at SJC.

The move would help narrow the difference between domestic and international prices, which on Tuesday was around US$45 an ounce. Analysts say the gap fuels gold smuggling and speculation.

"State Bank's permission to import has effectively cut the domestic price from up to $100 higher than international price per tael to a few hundred thousand dong," SJC's Tuong said.

Early this month, the State Bank of Vietnam approved five tons of gold imports and said it could double the quantity soon as surging prices sparked a frenzy at gold dealers and jewelers.

The State Bank said in a statement on Tuesday three tons of gold had been imported by far.

The measures come as gold prices in Vietnam rose to fresh record highs in recent days as world prices surged to all-time highs above $1,910 on Tuesday, due to gold's safe-haven allure amid nagging fears about the world economy.

Vietnam's move to allow more gold imports adds to the picture of rising Asian demand after recent purchases by central banks in Thailand and South Korea.

SJC offered to sell gold at a record of VND48.87 million ($2,347) per tael in Hanoi on Tuesday, SJC data showed. The latest price indicates a rise of more than 9 percent from a week ago.

One tael is equivalent to 37.5 grams or 1.21 troy ounce.

In a detailed measure to help cool gold markets published on Tuesday, the State Bank of Vietnam said it would monitor production and trading of gold bullion more strictly by issuing permits to a number of its selected trading firms.

This would allow the central bank "to intervene effectively in the gold market to fight against gold price speculation", the central bank said in a statement on its website.

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