The gold floor is closed, the physical gold market is dull

World gold prices increased slightly, while domestic gold prices this morning decreased by about 50,000 VND/tael compared to yesterday morning. The fluctuation of prices is prolonging the gloomy atmosphere of the physical gold market, despite the deadline for closing gold exchanges.

Today (March 30, 2010) is the deadline for shutting down gold trading floors according to the Government's decision. Up to now, some gold exchanges such as SBJ have stopped operating before the Lunar New Year, while some others such as Eximbank closed a few days ago. ACB floor said that its operations will end at 4:30 p.m. this afternoon. This morning, order matching activities at this exchange still took place normally.

Previously, when the Government decided to close the gold exchange, many opinions said that capital from the gold exchange would flow into physical gold. However, up to now, that does not seem to be the case. The lack of price fluctuations is making physical gold less attractive. At present, gold prices are still mainly affected by the fluctuations of the Euro/USD exchange rate.

The easing of the debt crisis in Europe has helped the Euro in recent days regain its strength against the greenback. The recovery of the Euro/USD exchange rate pushed up the gold price in the New York market on March 29. Closing, the spot gold price increased by 2.3 USD/oz, equivalent to an increase of 0.2% compared to the previous session's closing price, reaching 1,110 USD/oz. Yesterday, Greece sold 5 billion Euro worth of government bonds in the first issuance since European leaders agreed on a plan to support the country on March 25.

If it can raise enough money to repay maturing debt through the bond market, Greece will not need the above rescue package. On the other hand, the need to buy USD assets to seek safety is also decreasing, creating a force to push the exchange rate of this currency down. The Euro/USD exchange rate this morning is 1 Euro equivalent to more than 1.35 USD, from 1 Euro to more than 1.34 USD last morning. This is the highest Euro/USD exchange rate in about 1 week. Increasing according to the Euro exchange rate, this morning's gold price continued to move up, fluctuating around 1,111 USD/oz.

Gold prices yesterday and this morning were also supported by the buying action of the world's largest gold investment trust fund SPDR Gold Trust. Information listed on SPDR Gold's website shows that they have just purchased an additional 5.2 tons of gold, increasing their holdings to 1,129.8 tons. This is the largest volume of gold in SPDR Gold since the end of last year until now. Although supported by both the Euro exchange rate and demand, world gold prices have only increased slightly.

Financial news agency Bloomberg quoted senior analyst Eugen Weinberg of Commerzbank in Frankfurt as saying that gold prices may decrease because gold investment demand is going down. “Financial speculators seem to be becoming more cautious. If they continue to cut bullish gold contracts, gold prices will come under downward pressure. Therefore, the important psychological threshold of 1,100 USD/oz may once again be tested this week,” Mr. Weinberg wrote in a report obtained by Bloomberg. However, according to this expert, increased physical gold demand around the $1,100 threshold can prevent gold prices from falling deeply.

According to the jewelry business, gloomy purchasing power has prevented the domestic gold price from rising along with the world gold price this morning. Compared to yesterday morning, the domestic gold price even decreased by 30,000-50,000 VND/tael, to 26.20 million VND/tael (buying) and over 26.25 million VND/tael (selling). In Hanoi market, Phu Quy quoted SJC gold price at 10:15 a.m. at 26.20 million VND/tael (buy) and 26.27 million VND/tael (sell).

In the Ho Chi Minh City market, the price of gold of the same type listed by SJC on the business website is 26.20 million VND/tael and 26.25 million VND/tael, respectively. Sacombank system at the same time quoted the price of SBJ gold bars at 26.21 million VND/tael (buying) and 21.24 million VND/tael (selling). Sacombank-SBJ forecasts that the domestic physical gold price will continue to move in a narrow range as long as the world gold price has not escaped the 1090-1130 USD/oz range. Crude oil prices last night increased quite strongly thanks to the rise of the US stock market and the decline of the USD exchange rate. At the end of the trading session in New York, the price of light sweet crude oil delivered in April 2010 increased by 2.17 USD/barrel (2.7%), closing at 82.17 USD/barrel.

This morning, oil prices dropped to over 82 USD/barrel. The interbank USD/VND exchange rate announced by the State Bank continues to remain at 18,544 VND/USD. At Vietcombank, the buying and selling prices of USD are 19,070 VND/USD and 19,100 VND/USD respectively. In the Hanoi market this morning, some foreign currency transaction points bought and sold USD at prices of 19,280 VND/USD and 19,310 VND/USD respectively, down 20 VND/USD compared to yesterday morning.

According to Vneconomy