The price of gold in Vietnam declined on February 8 as global bullion prices plummeted after Jerome Powell, Chairman of the US Federal Reserve (Fed), sent a message that interest rates may increase further in the future to curb inflation.
Vietnam’s consumer price index (CPI) in January edged up by 0.52 % month-on-month, fueled by high consumer demand for the Lunar New Year or Tet which fell in the same month, the General Statistics Office said on January 29.
After the US Federal Reserve (FED) announced to raise the benchmark interest rate by 75 basis points, or 0.75 percentage points, to 3.75-4 percent per annum as expected, gold, stocks, and US dollars at banks fell on November 3. Only the US dollar price on the free market jumped sharply.
Mr. Lam Minh Chanh, a personal finance expert, said that in this context of black swans, world-changing events that are rare and difficult to predict, it is necessary to diversify investment channels to minimize against market downturns.
The State Bank of Vietnam is facing multiple pressures in 2022 in managing the foreign exchange rate, such as net withdrawal of hundreds of billions of dongs through the treasury bill channels, selling of foreign currency from reserves, and in adjusting the US dollar selling price.
Although the current world’s gold price is decreasing, domestic gold businesses are selling SJC gold at over VND66 million (US$2,817) per tael making the gap between domestic and international gold prices over VND18 million (US$768) per tael.
Mr. Huynh Trung Khanh, Vice Chairman of the Vietnam Gold Trading Association, said that because the gap between domestic and world gold prices is too high, SJC-gold buyers bear many risks, especially when domestic and international gold prices have not been connected yet.
While the price of SJC gold on July 15 is more than VND20 million per tael (1.2 ounces) higher than the global gold price, other 9999-gold rings are currently VND15-16 million per tael lower than that of SJC gold bars which are also 9999 gold.
Besides continuously giving risk warnings to investors about buying corporate bonds in the market, authorities have also issued many regulations to restrict the issuance of corporate bonds. However, in reality, many investors still purchase corporate bonds, despite potential risks.