The local gold price has hit a 6-month high, exceeding VND45 million a tael, following global trends.
The price of gold bullion produced by Saigon Jewelry Co (SJC), Vietnam’s biggest gold refiner with a 90 percent market share, has been quoted at VND44.95 million a tael and VND45.15 million a tael for bid and ask respectively, a week-on-week increase of 2 percent, or VND900,000 a tael.
It has risen for the fourth week in a row with a total increase of VND930,000 a tael.
SJC gold bullion saw its price surge VND2.4 million a tael in August, up 5.8 percent month on month, the strongest spike in the last seven months.
But local gold prices are still higher than their world counterparts, at VND2.4 million a tael following the official exchange rate of Vietcombank. Last week, the price gap between the local and international price surged to VND2.9 million a tael at its peak.
The world gold price started to pick up late last week after the US Federal Reserve hinted a fresh stimulus package, or the third round of quantitative easing (QE3), to aid the US economic recovery.
Spot gold rose $21.2 an ounce to $1,692 an ounce after the announcement by Fed chairman Ben Ben Bernanke on a possible QE3 at an annual address in Jackson Hole, Wyoming. His speech also claimed economic success from the Fed's past two QE rounds and the purchases of federal debt securities.
World gold prices marked their third consecutive monthly rise with a 4.5 percent increase in August, the strongest rise so far this year.
The gold price this week will be determined by macroeconomic data from the European Central Bank, the US and China.
Abundant local supply
The Ho Chi Minh City branch of the State Bank of Vietnam last week joined forces to reprocess over 48,000 taels of deformed SJC/ non-SJC and standardized non-SJC gold bullion for local supply.
The reprocessing of a total of 1.8 tons of gold bullion is scheduled to finish soon, said Nguyen Hoang Minh, deputy director of the HCMC branch of SBV.
The new supply is expected to quench the thirst of the local market, as rising demand has pushed the gold price over the world price, said experts.
A supervisory mission of the SBV has also been dispatched to SJC jewelry factories in the Tan Thuan Export Processing Zone in District 7 to monitor the reprocessing of the bullion, Minh told Tuoi Tre.
The proactive move of the central bank and SJC aims at creating a new supply for the market, thereby curbing expectations for gold speculation for high demand that can affect local gold prices.
Le Hung Dung, chairman of SJC board of directors, said SJC had also began buying back deformed SJC bullion while adding a VND50,000 reprocessing charge for the sellers.
SBV last week also ordered SJC to stop producing SJC gold bullion, according to an SBV official decision.
From August 23 SJC began only producing gold bullion of 99.99 percent purity under the direction and supervision of the central bank on the scale of production, the time of production and raw material gold supply, said SBV Decision No.1623.
On the basis of costs, applicable taxes and profit estimates, the SJC gold processing fee in the current period is VND50,000 a tael, said the decision.
SBV stopped the manufacture of non-SJC gold bullion on November 30, 2011.