The State Bank of Vietnam is considering a change to its policy on gold sales, photo Le Toan

At a conference last week held by the State Bank of Vietnam (SBV), Nguyen Anh Tuan, head of Foreign Exchange Management at the SBV, said that it will release a detailed report proposing updates to the decade-old Decree No.24/2012/ND-CP to reflect the current economic landscape.

“This decree, which granted exclusive rights to SJC for gold bar production, played a critical role in maintaining monetary stability. Over the past decade, the decree has helped insulate our exchange rate and banking operations from the fluctuations of the gold market,” Tuan said at the conference.

“The volatility in gold prices is a result of the current regulatory mechanisms. Our proposed revisions will concentrate on reassessing gold bar management and acknowledging that non-gold bar commodities should be regulated by market dynamics,” he added.

The objective of Decree 24 was to prevent gold from influencing the macroeconomy. However, amending Decree 24 is deemed essential as the economic and social conditions have since evolved.

Huynh Trung Khanh, vice chairman of the Vietnam Gold Trading Association and a senior advisor to the World Gold Council, observed a stark contrast between the high domestic demand for gold and a constrained supply, particularly of the SJC-branded gold.

“This imbalance is exacerbated by the SBV’s current policies on gold bar production. The existing supply-demand dissonance in our domestic market is pushing the internal gold prices up, diverging significantly from the international gold trends,” Khanh explained.

Gold’s traditional role as a financial safe haven is undergoing a revaluation. In times of geopolitical turmoil and economic downturns, gold has been a preferred asset. However, its current trajectory is less predictable.

“Historically thriving in low or negative real interest rate environments, gold’s appeal is challenged in periods of rising rates. While the link between gold prices and real interest rates has blurred, the likelihood of a continued upward trend in gold prices remains,” Khanh added.

On the issue of the recent surge in SJC gold prices, SBV Deputy Governor Dao Minh Tu expressed concerns.

“The recent spike in SJC gold prices can be attributed to speculative activities. We must be cautious, as an over-reliance on gold could potentially impact our foreign currency reserves and affect the value of VND,” Tu said.

Tran Huu Dang, CEO of ASEAN Gold, Silver, and Gemstone Company, noted the scarcity of SJC gold bars due to limited production, influencing price increases.

“Major domestic players, often anonymous, buy aggressively as global gold prices rise, pushing SJC gold bar prices significantly higher,” Dang said. “Moreover, the absence of gold imports means businesses lack raw materials for gold rings and jewellery. As a result, disruptions in raw gold supply cause plain gold ring prices to escalate well above global levels.”