The State Bank of Vietnam (SBV) announced on May 27 that it will discontinue gold bar auctions and implement a new strategy to stabilize the gold market, which is expected to begin on June 3.

Locals at a gold store in Hanoi. Photo: Quan Doi Nhan Dan Newspaper

The details of this new stabilization plan have not yet been disclosed by the authorities.

Since the end of 2023, gold prices have been steadily hitting new highs. SJC gold bars reached VND85 ($3,336) per tael in April and set a record of over VND92 million ($3,611) per tael in May. The domestic price gap with the international gold price has remained significant, at times exceeding VND20 million ($785) per tael.

To increase supply and stabilize the market, the State Bank started auctioning SJC gold bars on April 22. After nine auction sessions, six were successful, releasing over 48,000 taels of gold to the market.

As the auctions progressed, the volume of gold successfully auctioned increased. In the most recent session on May 23, 11 banks and enterprises purchased 13,400 taels, accounting for almost  80% of the amount offered.

However, many National Assembly delegates found this solution ineffective. Tran Van Lam, a standing member of the Finance and Budget Committee, criticized the auction process for lacking clear objectives. He pointed out that the floor price—set by the authorities for businesses to bid on—was too high, making it difficult for successful bidders to sell at lower prices.

Experts suggest that in order to bring domestic gold prices closer to international prices, the authorities need to accurately calculate production costs in Vietnam, along with import and other associated costs, to set an appropriate starting bid price.

Moreover, auctions are seen as a temporary measure. For a long-term solution, the SBV should consider revising Decree 24 on gold market management and ending the monopoly on SJC gold bars.

Recently, besides increasing supply through auctions, the central bank announced at the end of May that it would inspect the gold trading activities of four major companies—SJC, DOJI, PNJ, Bao Tin Minh Chau—and two banks, TPBank and EximBank. The inspection period will run from 2020 to mid-May 2024.