Gold price gap narrower on weak demand

The gap between local and global gold prices has narrowed considerably as the local price barely increased on Thursday while the global price moved up strongly on Wednesday. Saigon Jewelry Holding Co. (SJC) early on Thursday quoted its benchmark SJC gold at VND26.19 million per tael, increasing VND60,000 per tael from Wednesday. However, the spot price closed the day down at VND26.13 million per tael. A tael equals to 1.2 troy ounces. Meanwhile, by 6:00pm on Thursday, the gold price in London was US$1,115.9 an ounce, rising US$2.3 an ounce from the day earlier, having rallied more than US$10 on Wednesday. Therefore, the local gold price is now VND420,000 per tael higher than the global level, compared to the previous difference of some VND600,000 to VND1 million a tael. Nguyen Cong Tuong, deputy head of sale department of SJC, said that weak purchasing power had kept the local gold price from rising in tandem with global markets. SJC said its average daily trading volume is around 2,000 taels. Meanwhile, Phu Nhuan Jewelry Co. (PNJ) in the first quarter this year said its turnover declined by 50% from the previous quarter as it sold about 2,000-2,200 taels a day. Nguyen Thi Cuc, deputy general director of PNJ, said that due to weak demand and small difference between local and global gold prices, bullion traders are refraining from importing gold now given the slim profit when taking into account taxes and fees.