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Vietnamese government urged to narrow domestic, global gold price gap

Gold Prices

Mon 13 May 2024 | 07:34 PM
Waleed Farouk

The Vietnamese government, alarmed by the soaring prices of the precious metal and the widening gap between domestic and international benchmarks, has launched a sweeping crackdown on potential manipulation and illicit activities within the gold industry.

Permanent Vice Chairman of the National Assembly - Tran Thanh Man on May 13 voiced concern over skyrocketing gold prices, asking the Government to quickly review market management measures to narrow the wide gap between domestic and global prices.

Gold market management was among the socio-economic issues discussed by the NA Standing Committee at its ongoing 33rd session that opened earlier the same day.

Members of the committee held that there remain many problems in gold market management, and Le Thi Nga, Chairwoman of the NA’s Committee for Judicial Affairs, said the gap between domestic and global prices is too wide, adding they have never been so high.

The State Bank of Vietnam , the nation's central bank, has been entrusted with the task of scrutinizing gold production and trading enterprises, retail stores, and distribution agents. Bank has held several gold auctions, but prices are still shooting up. Therefore, strict management of and State intervention in this market are required.

Authorities suspect that these illicit activities are driving up domestic gold prices, creating an artificial bubble that could burst with devastating consequences for the economy.

Beyond the investigation, the government has unveiled a comprehensive set of measures aimed at tightening control over the gold market and restoring order.

In a major move towards transparency and accountability, all gold transactions will be required to be conducted using electronic invoices by the end of the second quarter of 2024.

This technological leap is expected to make it easier for authorities to monitor the market, track suspicious transactions, and identify potential violations.

For her part, Nguyen Thi Thanh, head of the NA Standing Committee’s board for deputies’ affairs, said it is necessary to thoroughly analyse the situation and devise solutions to such problems as private investment staying low but the money flow into gold rising.

Man said he worries that surging gold prices, even topping 90 million VND (over 3,500 USD) per tael, may lead to higher import expenses, material prices, and interest rates of businesses’ foreign borrowings, subsequently adversely impacting the domestic market.

He asked the Government to take flexible and timely measures to balance the targets of growth promotion and inflation control in the face of fluctuations in the domestic gold market. It needs to quickly and comprehensively review results of the market management measures implemented so far and narrow the wide gap.

Elaborating this issue, SBV Deputy Governor Pham Thanh Ha said international gold prices have risen sharply over the past few years due to global economic recession and high inflation caused by the COVID-19 pandemic’s impacts, as well as escalating geopolitical tensions among countries, resulting in high domestic prices.

In particular, since 2022, the gap between domestic SJC-branded gold bar prices and international ones has continually remained wide, he said, noting that global prices on May 13 have increased about 14% compared to the start of 2024. As domestic prices are dependent on global prices, they have also gone up accordingly.

Besides, limited domestic supply is another factor contributing to the gap, he added.

Mentioning some solutions, Ha said the central bank will continue increasing the supply for the market by organising more auctions to stabilise prices and narrow the gap.

It will also direct its branches to enhance market management, step up inspecting the businesses and credit institutions trading gold bars, and demand gold trading firms seriously comply with legal regulations in this regard, according to the official./.