Vietnam’s gold price topped VND 91.5 million a tael or 2,958.50 per troy ounce yesterday, a new peak for the yellow metal. At the same time, gold was trading on the world market for US$2,353 per troy ounce, a difference of US$605.50 or about 20.47 percent. 

To try to close the gap, Vietnam has attempted to hold gold auctions of the the State Bank’s supply, however the response has been lukewarm. Only two successful gold auctions have been held with the SBV only managing to sell 3,400 SJC gold bars.  Of note, multiple gold auctions have been announced in the last few weeks but have been cancelled due to a lack of interest. 

It’s not clear what the SBV is trying to achieve. On the one hand, it has publicly announced that gold auctions aim to increase supply and drive down the price to be more in line with the world gold price. On the other hand, however, it is setting its price relative to the current market price in Vietnam–ostensibly looking to make a profit and reduce the price of gold incrementally. However, with huge demand and only a very limited supply entering the market, this looks to be making the situation worse with gold prices currently higher than before the auctions started.

For background: The gold price in Vietnam is often much higher than the world gold price. This is due to Decree 24 issued in 2011 which restricts gold imports and exports to one company that can only do so with permission from the State Bank of Vietnam. Permission to import gold, however, has not been granted for over a decade. This has led to a mismatch in supply and demand pushing up the price.

For more information see: The Gold Price in Vietnam: Explained 2024