Gold shrinks from record as dollar escalates

The price of gold in Vietnam fell by VND500,000 a tael (1.2 ounces) from the record high of VND33.4 million on October 20 as global prices tumbled the most since July. However, domestic prices retreated at a slower pace than global prices.

Most gold shops bought the metal at VND32.8 million and sold at VND32.9-32.95 million as of 10:50 am local time.

Saigon Jewelry Company purchased gold at VND32.82 million and sold at VND32.89 million.

SBJ-brand gold of Sacombank Jewelry Company was bought at VND32.84 million and sold at VND32.88 million.

In Hanoi, Phu Quy Jewelry bought SJC-brand gold at VND32.85 million and sold at VND32.95 million.

Domestically, gold fetched VND650,000 a tael higher than global prices.

Yesterday, the metal climbed to an all-time high of VND33.36 million a tael as the dollar exchange rate against the Vietnamese dong jumped to VND20,030 per dollar on free market.

This morning, the rate raised to above VND20,000 for buying and VND20,100 for selling as of 10:30 am. A few particular agencies bought dollars at VND20,050 and sold at VND20,120. However, at some major agencies, the rate just rose by VND10-30 per dollar to trade at VND19,980 and VND20,060 per dollar.

Meanwhile, the dollar exchange rate at commercial banks remained unchanged. The State Bank of Vietnam said it had not planned to adjust the rate. However, on the interbank market, banks accepted a price of above VND19,800 per dollar.

Internationally, gold dropped the most since July as an unexpected interest rate increase by the Public Bank of China spurred gains for the greenback, sapping the demand for the metal as an alternative asset.

Gold for immediate delivery slumped $34.3 an ounce, or 2.5 percent, to close at $1,336.3 an ounce on the Comex in New York.

This morning, gold slightly restored, fluctuating between $1,337 and $1,340 an ounce in Asia.

Concerns that China would likely tighten its monetary policy further to avert inflation and asset bubble, tempted investors to shift their capitals to the US currency.

The US Dollar Index, a six-major-currency gauge of the greenback’s strength, recovered 1.4 percent on October 19, the highest pace in the past month, as the US Treasury Secretary on October 18 said that the country would not devalue its currency.

The euro exchange rate against the US dollar slid to $1.38 this morning from $1.4 yesterday.

Crude oil futures for November delivery slashed $3.59 a barrel to close at $79.49 a barrel on the New York Mercantile Exchange.

This morning, crude oil traded below $80 a barrel.