The gold buying price fell further in the local market on July 20.
Local gold prices drop to five-year low
Sai Gon Jewellery JSC bought one tael, or 1.205 ounces, of the state-owned SJC's gold for VND32.6 million (US$1,493), which was a drop of VND400,000 ($18.3) from two days ago.
The selling price continued to be VND33 million ($1,511.3) per tael, a three-year low in Vietnam.
Bao Tin Minh Chau Gold and Jewellery Company, Doji Gold and Gems Group and Phu Nhuan Jewellery JSC also listed their gold buying price at VND32.6 million ($1,493) to VND32.9 million ($1,506) and selling price at VND33 million ($1,511) to VND33.1 million ($1,515).
Bao Tin Minh Chau Gold and Jewellery Company recorded a larger number of gold buyers, with a buying/selling ratio of 75/25. Normally, the rate was about 60/40.
Meanwhile, Phu Nhuan Jewellery JSC said gold prices might fall further due to global price fluctuations.
On the global gold trading website Kitco.com, the price of gold slipped $5.4 per ounce. The site listed one ounce of gold at $1,114 or $1,383 per tael.
Reuters.com also said gold plunged four per cent, a five-year low, yesterday, as sellers in China, the top consumer market, sold the metal in a matter of minutes, just as bullion's safe-haven status took a fresh knock from mounting expectations of a rate hike in the United States.
Nguyen Thanh Long, former director of Sai Gon Jewellery JSC, said it was normal for the gold price to fluctuate. He said buyers should be patient and not adopt a herd mentality that makes them sell their gold when prices drop.
Long said some Vietnamese people would feel insecure if the prices of gold dropped, and would sell their gold. Others would follow the trend. The same thing happens when prices rise, and the people flock to buy expensive things for the highest price.
He suggested that people should not do the same, and said they should buy gold when the price falls to its lowest and should sell when the prices jump to record highs.
Long added the lower prices of gold would not influence the domestic economy because the State Bank of Vietnam had interfered appropriately and controlled the gold market in the last two years.
On July 20, the gap between the local gold prices and the international prices was $128.
Gold has been a popular form of savings in Vietnam for many years. The saving of gold as a hedge engaged against uncertainty, pushed domestic prices much higher than the world price.
In October 2012, local prices soared to VND48.3 million ($2,300) when the global prices for one tael were $2,048. (One tael is equal to 1.205 ounce ).
The central bank, started its strong intervention since March 2013. SBV often told media that it was keeping track of the changes in gold prices and would intervene, if needed.