The Central Bank of Iran is to resume gold coin auctions until the market is fully saturated and prices become stable.
The Central Bank of Iran has sufficient reserves of gold bars and coins, and will resume gold coin auctions until the market is fully saturated and prices become stable, the director of CBI's Office for Banknote Issuance announced.
“CBI is in charge of minting various kinds of gold coins in the country. Hence it is also responsible for meeting the market demand and controlling the prices,” Masoud Rahimi said.
The auctions were started in November through Bank Melli Iran’s affiliate, Bank Kargoshaee, to deflate the Iranian market bubble that saw benchmark gold coins rise to a six-year high.
However, the launch of 16 auctions has not failed to deflate the coin's bubble, as prices have continued to surge.
According to Tehran Gold and Jewelry Union’s website, the price of benchmark Emami gold coin on Tuesday approached 15 million rials ($3,530), registering an increase of 60,000 rials or 0.7% compared to the previous day.
This is the highest value of Emami gold coin since five years ago in Tehran’s open market.
The director of CBI's Office for Banknote Issuance added that keeping the national currency strong is the regulator's main agenda.
“Any unreasonable surge in gold coin rates, which is not in line with the [real] price of gold can have inflationary effects on the foreign exchange market and that’s why CBI interferes in the gold market to stabilize the rates,” he said.
Rahimi noted that the main reason for this surge is the unusually high demand since a great deal of investment flowed into the gold coin market instead of the forex market, as the public perception is that the price of gold coin will continue to rise in the coming months.
“Many ordinary people have also invested in the gold market to retain the value of their money, which has further heated up the market,” he added.