Vietnam Gold Trading Plummets amid High Dong Rates
"An influx of high-quality fake gold also spooked some would-be traders."
Gold trading in Vietnam, one of the world's biggest importers of the metal, has fallen sharply due to low demand as investors shifted back into the local currency, but prices have remained steady, dealers and state media said on Monday.
Volume was down more than 50% compared with the start of the year, said Nguyen Cong Tuong, deputy head of sales at Saigon Jewelry Company Ltd (SJC), one of the country's biggest gold trading companies.
"Purchasing power is very weak because people want to sell gold for dong," he said, adding that total trading at SJC was about 2,000 taels a day compared to 5,000-6,000 taels earlier this year.
The dong has been steadier against the dollar in recent weeks after a devaluation in February.
The central bank has adopted several measures to discourage the use of gold in an effort to curb inflation and stabilize the money market.
The State Bank banned gold lending at commercial banks in early May and banks slashed gold deposit interest rates to nearly zero.
An influx of high-quality fake gold in the market had also spooked some would-be traders and depressed volume, state-run newspaper Dau Tu reported on Monday, quoting Vu Minh Chau, general director of the Bao Tin Minh Chau gold shop.
Chau said trading had dropped 60% in the past week because gold mixed with wolfram, or tungsten, a combination that can evade detection by gold analysis machines, had been discovered in circulation.
Tuong of SJC said fake gold was just one factor behind the fall in volume in the gold market, and not the main one. "(The fall) is because of government policies," he said.
The Vietnam Gold Association estimated about 500 tons of goldóworth over $24 billionówas hidden under mattresses in Vietnam.