Investment demand for gold in Vietnam could be a quarter less in 2013 than last year as the government tightens its grip on the bullion market to stabilize the country's currency, metals consultancy GFMS said.
People in Vietnam tend to store gold as a hedge against inflation, once among the highest in Asia, while the dong currency is often pressured by accumulation of the dollar for use in smuggling in the metal, given the absence of official imports.
"We saw a sharp fall in access to gold bars from the second half of 2012, as the government now has much stronger control over what is minted and how much is minted," said Cameron Alexander, a senior metals analyst at GFMS.
As a result, investment demand, which contributes about 85 percent of total gold demand in the world's No.9 bullion consumer, is expected to fall 22 to 25 percent in 2013, he said.
Vietnam's consumer gold demand, including jewelry and investment bars, dropped 24 percent to 77 tons last year from 100.8 tons in 2011 after the government moved to curb gold speculation that had contributed to the dong's volatility, says GFMS, a unit of Thomson Reuters.
The demand estimates are based on scrap supply and the unofficial inflow of gold, GFMS said. Vietnam, Asia's No. 4 gold consumer after India, China and Thailand, has not officially imported any gold since late 2011.
(Read More: In Case You Missed This: Vietnam Stocks Up 17%)
Similar to Vietnam, top gold consumer India has been trying to curb its gold demand, which has contributed to a ballooning current account deficit. India raised an import duty on gold to 6 percent from 4 percent in January.
The State Bank of Vietnam (SBV) has said it will directly import gold and trade the precious metal with gold companies and banks as part of the plan to control the domestic market.
"Vietnam is essentially a three-currency economy now: dong, dollar and gold," said Jonathan Pincus, dean of the Fulbright Economics Teaching Program based in Ho Chi Minh City, Vietnam's commercial center.
"SBV wants to discourage speculation in gold and eventually reduce the role of the dollar and gold in domestic transactions and as a store of wealth. Controlling the domestic supply of gold is part of this strategy."
(Read More: Brace for Big Drop If Gold Breaches This Level)
The government has taken several steps to control the market, by slashing the number of gold trading outfits by almost 80 percent to about 2,500 by the end of 2012 and ordered banks to stop taking gold deposits and lending the metal by the first half of 2013.
The SBV has also limited trading to just one brand of gold bars minted by state-owned Saigon Jewellery Company Limited (SJC), which should help curb the flow of smuggled gold from neighboring countries as other brands of gold bars lose favor with Vietnamese investors.
Domestic premiums on gold bars surged to a record of more than $200 an ounce last week over global spot prices as a lack of imports created a shortage of the metal, helping keep buyers at bay.
(Read More: Currency War? Here's How to Hedge It With Gold)
But demand may creep back up as premiums have come off highs this week, dropping to just above $100 on Thursday.
"I am still keeping gold, no matter what the issues are on the domestic market," said Pham Hoang Anh Tuan, an investor in Ho Chi Minh City. "If it (the premium) narrows, I will pour more cash into it."