“Gold prices are back down from near-all-time highs. However, without a fundamental solution to control the gold market, economists said that the price of gold will surge again.”
The price of gold hit an all-time high of over VND80 million (US$3,296) last week, but it has since dropped substantially. Several economic experts have stated that there is no fundamental solution in place to manage the gold market and predict that the price of gold will once again surge.
In recent days, the local price of SJC gold has been substantially higher than the global rate, and Vietnam’s Gold Trading Association has attributed this difference to irrational levels. The association has advised that the government pursue solutions to increase the market supply of gold and narrow the gap between domestic and global gold prices.
According to Ms. Nguyen Thi Huong, General Director of General Statistics Office of Vietnam under the Ministry of Planning and Investment, gold prices have been affected primarily by two factors. First, the US Federal Reserve’s decision to temporarily suspend interest rate increases and its prediction to reduce interest rates three times in 2024 prevented the US dollar from being pushed up, leading to an increase in gold prices. The need for gold reserves of world and Asian central banks has also contributed to a temporary scarcity of supply. Second, the State Bank of Vietnam’s decision to lower savings interest rates and the lack of activity in the real estate market prompted investors to seek refuge in gold. These are the primary catalysts behind recent fluctuations in gold prices.
Mr. Nguyen Tri Hieu, a banking and finance expert, noted that the psychology of hoarding gold has become popular, particularly among low-income earners who lack access to investment opportunities that require substantial capital and specialized knowledge. The recent cooling of the gold market following the Prime Minister’s order to stabilize it is expected to be temporary without specific and proactive measures to address the issue persistently.
