HANOI(BullionStreet): Vietnam's central bank, The State Bank of Vietnam said gold is not an essential item and the price difference between domestic and global prices had not impacted the macro-economy.

According to SBV governor Nguyen Van Binh the bank will sell gold at good prices to support when the gold market experiences unfavorable changes, such as a liquidity problem, only to support it and not to stabilize prices.

Gold prices in Vietnam climbed upto a high of VND4 million per tael higher than the world’s levels.

When asked whether SBV can trade in gold bars, he said the central bank would join the market when there are credit institutions seeking to sell gold to the State. This will be the ultimate solution, he said.

The State will buy gold when there is a need to increase foreign exchange reserve, he added.

After buying a huge volume of gold, the State can export it to earn foreign currency. This will improve foreign exchange reserve, prestige and payment capacity of the State.

Analysts said gold investors in Vietnam remained clueless as SBV’s intervention in the market is unknown.

Meanwhile, Vietnam Gold Traders Association has called for the removal of the 10 per cent tariff on gold jewellery products which have more than 80 per cent gold content.

In a letter to the Ministry of Finance and the State Bank of Viet Nam, the association said exports of Vietnamese gold jewellery products had come to a deadlock since the tax rate came into effect in 2011.

Business opportunities for gold traders were increasingly narrow, especially since the government had tightened gold production and trading activities under Decree 24, it said.

Many businesses who were not eligible to produce and trade gold bars wanted to promote gold jewellery exports but they faced high tariffs.

The association asked that the zero tax rate on gold jewellery which had a gold content of less than 80 per cent be left unchanged.