Gold prices continued to head north in Vietnam Wednesday as they tracked international prices that moved up to a fresh seven-month high.
Saigon Jewelry Joint-Stock Company gold gained VND150,000 to VND19.55 million a tael, or $931.64 per ounce. A tael is equal to 1.2 ounces.
Huynh Trung Khanh, a Vietnamese consultant for the World Gold Council, anticipated domestic prices to rise further this week since they are lower than international rates.
“If gold drops in the last two trading days of the week, it will be just a correction. Gold will be right back on its upward trend,” Khanh said.
The gap between domestic and international prices is due to the fact that the Vietnamese market is not connected with global markets, he said. At present, Vietnam allows only 20 financial corporations to import gold.
A Ho Chi Minh City-based analyst, who wished to remain anonymous, told Thanh Nien Daily that people will cash in on the difference between Vietnamese and global prices to smuggle gold to neighboring countries. “Therefore gold will continue to rise,” he said.
International move
Gold prices inched up to hit a fresh seven-month high Wednesday, as growing concern over the global economy redoubled investors' favor for safe-haven assets.
Global markets were roiled by a slew of grim reports showing a slumping Japanese economy and contracting US economic activity as well as fears that Eastern Europe's battered economies would drag down Western banks.
The market was largely steady, however, as many players took a break from the recent rally, traders said.
Spot gold was trading at $970.10 an ounce, up $1.75 from the notional New York close, after rising as high as $973.50 an ounce to a fresh seven-month high.
Gold futures for April delivery on COMEX rose $5.5 to $973 an ounce, after touching a new seven-month high of $975.4.
“It is holding up quite well, considering the move it had. Macroeconomic pessimism that was evident in the New York equities market is providing quite a strong support for gold, for its safe-haven quality,” said Toby Hassall, a research analyst at Commodity Warrants Australia.
Reflecting the keen interest in gold, holdings at the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, struck a record 1,008.80 tons on Tuesday, up 2.3 percent from Friday.
“The precious metals market will look to the equities market for some support. If American equities extend losses from recent lows, we may see the $1,000 level tested in the near term,” said Hassall.
