After an 11-year hiatus, the State Bank of Vietnam (SBV) managed to resume its gold bar auction on April 23, 2024, signaling a renewed interest in the precious metal market.

This auction marked a significant departure from the past decade's absence of such activities.

Low Participation and Modest Returns

Despite the anticipation surrounding the auction, participation remained subdued, with only two winning members securing a total of 3,400 taels of gold. The auction's total bid volume fell short of expectations, reflecting caution among businesses amidst volatile global gold prices.

The highest winning bid price stood at VND 81,330,000 (USD 3,211) per tael, while the lowest winning bid price was VND 81,320,000 (USD 3,211) per tael.

Experts note that the tepid response to the auction is unsurprising given the current climate of fluctuating gold prices globally. Businesses are exercising caution, seeking to strike a delicate balance between supply and demand.

The principle of "selling as much as buying" guides their strategies, necessitating prudent decisions amidst the inherent risks associated with stockpiling large volumes of gold during periods of uncertainty.

SBV's Auction Parameters

Ahead of the auction, the SBV outlined specific parameters governing participation. The total volume of gold bars expected to be auctioned was set at 16,800 taels, with individual members permitted to bid for a minimum of 14 lots (equivalent to 1,400 taels) and a maximum of 20 lots (equivalent to 2,000 taels).

Bid prices were to be made in increments of VND 10,000 (USD 0.40) per tael, with bid volumes increasing in increments of one lot (100 taels). Additionally, bidding members were required to register prices equal to or higher than the floor price set by the SBV.

While the auction's outcome may have fallen short of expectations, its significance lies in the SBV's commitment to fostering transparency and liquidity in the gold market.

Despite the challenges posed by global economic volatility, Vietnam's central bank remains steadfast in its efforts to maintain stability and confidence in the financial sector.

The successful resumption of gold bar auctions on April 23 by the SBV marks a notable development in the country's financial landscape. As businesses navigate the complexities of a volatile global market, the auction serves as a barometer of sentiment and resilience in the face of uncertainty.

While subdued participation may hint at apprehensions among market players, it also underscores the cautious optimism prevailing within Vietnam's economic ecosystem.