With domestic gold prices far higher than world levels, the demand has weakened due to risk aversion. Therefore, there is reason for businesses to worry that they could not sell the metal after they win a gold auction held by the State Bank of Vietnam (SBV). Why did they fail? In the three SJC gold auction sessions organized in late April by the SBV, two sessions were canceled due to little interest of businesses, with only one successful session done on April 23, but with two out of 11 participating businesses winning the bid for a mere 3,400 taels (*) out of a total of 16,800 taels of SJC gold offered. The first reason for the failure of the gold auctions is possibly the high reserve price set by the SBV, which is unattractive to businesses. Specifically, on April 22, the reserve price was VND81.8 million a tael, VND80.7 million on April 23, and VND82.3 million on April 25. These prices were almost on par with the then market prices, so clearly, they did not help bring down domestic gold prices. Secondly, the minimum bidding volume was seen as too high. If they win an auction but take late delivery […]
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