HANOI (Commodity Online) : Vietnam's decision to allow gold imports evoked mixed response among gold traders and consumers.
Vietnam Gold Business Association said the decision helped boost gold trade and helped prices to ease in comparison with global prices.
However Saigon Jewelry Holding Company, Vietnam's largest gold trader said central bank decision allowing local gold traders to import unlimited amounts of gold has brought down prices drastically in the domestic market.
They said a tael of gold lost VND30,000-40,000 on Thursday , the second consecutive day that prices fell. A tael is approximately equal to 1.2 ounces.
Many investors decided to sell for fear that resumption of imports would cause prices to drop, the company said.
Ho Chi Minh City-based Phu Nhuan Jewelry Joint Stock Company, said as the gap between domestic and world prices has narrowed to VND350,000 per tael, compared to VND700,000 early this month, gold traders will have to consider carefully their decison on when they should import gold to ensure profitability
Country's central bank, the State Bank of Vietnam on Sunday lifted restrictions on gold imports in an attempt to narrow the large gap between domestic and global gold prices.
Many companies have already registered with the central bank to import gold. SJC, the country's largest gold trader, plans to import five tons while another Ho Chi Minh City-based company, PNJ, is seeking approval to import two tons.
Local traders can now import unlimited volumes of gold.
The central bank's decision came as domestic gold prices soared to much higher levels than the rest of the world, prompting local traders to illegally import gold, taking advantage of the price gap of around VND500,000 ($25) per tael. A tael is approximately equal to 1.2 ounces.
Analysts said gold prices in Vietnam have surged due to speculation that there is a scarcity of gold in the country as a result of large exports of the precious metal.
Vietnam halted gold imports in mid 2008 to control soaring prices and a ballooning trade gap. At the end of June, gold deposits at banks amounted to 120 tons.
Earlier this year the Vietnam Gold Business Association requested the government to remove restrictions on gold imports so that prices could be determined by local supply and demand.
Vietnam exported around 36 tons of gold in the first six months, official statistics showed. SJC was the only gold trader allowed to import six tons of gold during the period