Gold Transaction Centre in Need

The foundation of a gold transaction centre is necessary to cope with frequent gold fluctuations and unpredictability of recent times.

Gold transaction centre on the blueprint

Mr. Dinh Nho Bang, vice chairman and general secretary of the Vietnam Gold Traders Association showed that the Vietnam Gold Traders Association is speeding up necessary procedures for the operation of the gold transaction centre by this year's end.

Bang said the current random trading of gold, silver, diamond and gemstones does more harm than good for both sellers and buyers as it lacks organisation and supervision.

Therefore, the establishment of the gold transaction centre is pressing to contain negative impacts on the national economy from the free gold market because gold prices directly influence prices of other commodities, national monetary policies and economic stability.

Besides, the centre will help the government to take control of gold supply and demand curves to introduce sound gold policies. The gold transaction centre will create a new supply and demand regulation channel for gold trading enterprises, helping them take the initiative of seeking source gold, reducing a considerable sum of foreign currencies used to import gold and mobilizing idle gold in the local market, and reduce import costs.

As a result, the centre will help reduce gold prices and increase reinvestment and competition of gold trading enterprises, and gradually remove the existing "black" gold market. Payment methods made by VND (Vietnamese Dong) will put aside a large sum of foreign currencies in circulation, which will help the foreign currency supply and needs balancing.

Gold prices to be on the rise

Bang said, "The recent rise in gold prices is begotten by world trends. Gold prices go in line with hard foreign currencies. The fluctuation of the US dollar exchange rate directly impacts gold prices.

The depreciation of the US dollar will make the gold price go up, and vice versa. Recently, the US dollar lost value against the Euro in the EU market (EUR1=US1.322) as well as against Japanese Yen in the Asian market. The main reasons for the US dollar slides are attributed to poor improvements of the US macroeconomic indexes like inflation, unemployment, overspending trade balance and others and to the political instability in many areas in the world."

Thus, according to world economic specialists, gold prices will likely continue to stand at over US$400/ounce and may climb to US$440/ounce in the coming time. Vietnam’s gold prices have also gone in line with the world movements because Vietnam has to import all source gold while local source gold accounts for a small proportion.

Gold consumption in Vietnam is estimated at some 50 tons per annum but will not exceed the peak of late 2004. The gold price rise in recent days will not greatly affect gold trading on the market, Bang said.

• P.V