Local gold dips as world price plummets

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Báo Tuổi Trẻ English - 33 month(s) ago 92 readings

Local gold dips as world price plummets

The local gold price has hit a 9-month low after the world gold price dropped below $1,600 an ounce.

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As of 9 am Wednesday the gold prices of Saigon Jewelry Co (SJC), Vietnam’s biggest gold trader, lost over VND650,000 compared to Tuesday’s closing price, falling to around VND41.05-41.25 million a tael for bid and ask, respectively.

As of 10:30 am, the price had risen slightly to VND41.15-41.3 million a teal for bid and ask, respectively.

In Hanoi, SJC gold sold at DOJI Co have been quoted at VND41.1-41.3 million a tael for bid and ask respectively, down VND670,000 a teal day on day.

Since the beginning of the week, the gold price has dropped about VND1.3 million, continuously setting new lows over the last two weeks.

In mid-August the gold price was the highest ever, VND48.35 million a tael, but ever since gold has plummeted by more than VND7 million a tael.

The world gold price is still some VND800,000 a tael lower than the local price, according to the benchmark Vietcombank exchange rate.

On the world market, spot gold prices fell by $39.8 an ounce compared with the previous session to $1,598.3 an ounce, its lowest level since early January, according to online trading floor Kitco.com.

The world gold price is under selloff pressure from investors after the price slipped below the $1,600 threshold.

Meanwhile, concerns over whether Greece will receive aid or not and the European debt situation as a whole have also had negative impact on the price of gold.

At the closing of Tuesday’s session, the local gold price dropped some VND500,000 a tael, losing its VND42 million threshold.

In early afternoon, SJC gold price was quoted at VND41.66 million and VND41.96 million for bid and ask respectively, the lowest price since January 3.

Up until 4pm that afternoon, the company had had to adjust the SJC gold price 19 times.

The bid and ask prices then were VND41.92 million and VND42.42 million, respectively.

On the world market, gold prices continued to drop. At 4:50 pm local time, spot gold prices on the Kitco floor hit $1,626.2 an ounce, down $16.5 (1 percent) an ounce compared to the morning’s price.

Global trends and fear

On Wednesday night (local time), gold pierced the $1,600 threshold, its 2-month low, due to a massive selloff over fears of a renewed European financial meltdown.

Gold prices on the world market fell by more than 2 percent in the session, the lowest level this year, because of doubts over whether aid will come to Greece and fresh concerns about the European debt crisis.

Considered a risky asset, gold’s year-on-year growth has contracted from about 5-8 percent to less than 3 percent.

Analysts said that given Francois Hollande’s, the new president of France, views against austerity measures, and the unstable political situation in Greece, they are unsure how European leaders can find billions of euros to solve the current debt crisis.

“Absent new monetary stimulus, gold doesn’t make sense. When people are fearful of the fiat currencies eroding their wealth, that’s when gold catches its bid,” newswire theglobeandmail.com quoted Jeffrey Sherman, commodities portfolio manager of the $33-billion asset manager DoubleLine Capital, as saying.

At the close of Tuesday’s session, spot gold prices fell 2 percent to $1,604.7 an ounce. At one point during the session prices had even dropped to $1,594.94 an ounce, the lowest since January 4.

Gold futures for June delivery on the Comex trading floor fell $34.6 to $1,604.5 an ounce. Trading volume increased strongly to a 1-month high, rising 40 percent higher than the average rate in the last 30 days.

Since the 2012 high of $1,790 an ounce, the gold price has dropped $180 an ounce as the possibility of another stimulus program in the U.S. has become increasingly unlikely.

On Tuesday, due to the falling gold price, the value of assets of SPDR Gold Trust fell to $65.657 billion, down $1.691 billion compared with the previous amount.

Since the beginning of May, SPDR Gold Trust's assets have fallen a total of $2.477 billion, despite the 0.9 tons of gold purchased on Monday.

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