=
Gold has dominated headlines this week after the precious metal surged to its highest ever price of over VND80 million (US$3,296). According to economic experts, the gold market has fluctuated strongly in recent days not only due to consumer psychological factors.
Just after the Prime Minister sent a telegram requesting the State Bank (SBV) and relevant agencies to implement measures to stabilize the gold market when the price of each tael of gold was sold at a record - more than VND 80 million, the domestic gold price in the past 2 days has dropped dramatically.
Accordingly, after decreasing by more than VND 5 million per tael the previous day, SJC gold price continued to decrease on December 29. At about 2:00 p.m., Mi Hong gold shop in Ho Chi Minh City’s Binh Thanh District listed the buying price of VND73 million per tael and the selling price of VND76 million, down VND300,000 for buying and VND1.3 million for selling compared to late afternoon the previous day. Thus, if a person bought an SJC gold tael at VND80.3 million, they suffered a loss of about VND8 million a tael.
The gold price listed by Bao Tin Minh Chau on the morning of December 29 was at VND74 million a tael, down VND 3.5 million a tael compared to the previous day. Compared to previous days, just a few customers came to the gold shop for transactions. Similarly, Phu Quy Group's store quoted the buying and selling price of SJC gold bars at VND70 million a tael and VND74 million a tael respectively, down VND 8.2 million per tael on the buying and down VND5.8 million per tael on the selling compared to the morning of December 28.
The Vietnam Gold Trading Association said that since the Decree 24/2012 took effect until now, the State Bank has not imported more SJC gold and the Saigon Jewelry Company - SJC has not been allowed to stamp new gold, but only processing some dented gold. The Association has repeatedly proposed that the State import raw gold for the production of gold rings and jewelry to reduce the demand for gold bars.
Mr. Huynh Trung Khanh, Vice Chairman of the Vietnam Gold Trading Association cum Advisor to the World Gold Council in Vietnam, said that the current domestic gold price difference compared to the world price is at an unreasonable level; the local price of SJC gold was sometime VND18 million to VND20 million higher than that of the world.
Therefore, the decrease in SJC gold price over the past 2 days is not surprising, because the price of SJC gold bars has increased rapidly in recent times largely due to buyers’ psychological factors. According to Mr. Khanh, in the long term, the State Bank needs to have a fundamental solution to increase the supply of gold to the market to narrow the difference between domestic and world gold prices.
Meanwhile, Ms. Nguyen Thi Huong, General Director of General Statistics Office of Vietnam under the Ministry of Planning and Investment, said that gold price fluctuations are mainly due to two factors. Firstly, the US Federal Reserve (FED) announced to temporarily suspend interest rate increases; plus, the FED predicted to reduce interest rates three times in 2024, this will prevent the US dollars from being pushed up, leading to a faster increase in gold prices than this currency. At the same time, difficulties in the stock market as well as the need for gold reserves of central banks in the world and the Asian region cause a temporary scarcity of supply.
Second, the State Bank of Vietnam lowered savings interest rates and the real estate market remained quiet, so investors have sought refuge in gold as a safe haven. These are the main factors affecting gold prices leading to price fluctuations in recent times.
Banking and finance expert Nguyen Tri Hieu said that domestic gold prices have continuously peaked in a short period of time, so the psychology of hoarding gold has become popular for many people, especially low income earners who can’t access investment channels that require large amounts of capital and specialized knowledge such as stocks, corporate bonds, and real estate. Because of worries that gold prices may continue to increase, many people have accepted to buy gold at very high prices. When the Prime Minister ordered to stabilize the gold market, the gold market cooled down. However, without specific proactive measures, the cooling gold market will only be temporary.
