Vietnam's gold market lacks centralized trading place
At the workshop "Market developments, prices in Vietnam in the first 6 months of the year and forecast for the whole year 2024" on the morning of June 3, talking about the reasons for the sharp increase in gold prices in recent times, economic expert, Associate Professor, Dr. Ngo Tri Long pointed out that the world gold price increased sharply, at one point increasing to 2,413.8 USD/ounce.
For the domestic market, there are 7 reasons affecting the gold price. Firstly, due to the imbalance of supply and demand, when demand increases, limited supply pushes the gold price up.
Vietnamese people have a habit of holding gold to secure assets and speculate, especially when the economy is still facing many difficulties. The international gold price is on an upward trend, forecast to increase sharply, creating an attractive force in investment channels, especially at the present time. Gold has good liquidity, so it is of interest to many people.
Second, traditional investment channels such as stocks and real estate are becoming uncertain and less attractive, with savings interest rates continuously falling.
Experts assess that the Vietnamese gold market lacks a centralized trading place.
Third, the Vietnamese gold market lacks a centralized trading place, instead there are many small-scale gold shops and traders operating independently. This fragmentation creates a lack of price transparency and facilitates the possibility of price manipulation, creating a land for speculation.
Fourth, rumors, market manipulation by certain players and crowd psychology, movements can amplify price fluctuations, leading to bubbles and subsequent crashes.
Fifth, regarding the gold trading management mechanism, it only focuses on and depends heavily on physical gold (gold bars and gold jewelry). Gold products (gold certificates, gold accounts/term deposits) have not been diversified. Therefore, this demand for physical gold puts pressure on domestic gold prices, making them vulnerable to global fluctuations.
Sixth, unlike the markets of developed countries where gold-related transactions are mainly through derivative instruments and ETFs (exchange-traded funds), in Vietnam, these instruments have not been used in the gold market, mainly physical gold transactions.
Seventh, Vietnam’s developing financial system still lacks many attractive investment tools. Many Vietnamese still prefer gold as a safe haven, especially when the economy shows signs of instability.
Gold tax transactions should be carefully considered
According to Mr. Long, to stabilize the gold market, it is necessary to urgently amend Decree No. 24/2024 dated February 27, 2024 to eliminate current shortcomings.
At the same time, return the production and trading of gold bars to enterprises. Commercial banks should not play the role of a focal point in trading gold bars, but should only implement derivative products (with sufficient experience and expertise). If they want to trade gold bars, they should establish an independent gold company.
It is necessary to soon allow the Commodity Exchange to trade gold futures through standard futures contracts like advanced countries in the world. Participating members must meet strict standards and be allowed to import and export gold.
There is currently a view that gold transactions should be taxed. Mr. Long believes that taxing gold transactions will increase the burden on gold buyers, increase the difference between domestic gold prices and world gold prices, and people will limit selling gold.
This will cause gold to remain stagnant in the people's hands, not converting the gold source into financial resources for production and business, and at the same time limit the gold supply in the economy. Therefore, the proposal to tax gold transactions needs to be considered carefully.
Experts say the proposal to tax gold transactions should be carefully considered.
In general, assessing the gold market in recent times, Mr. Long stated that, in the face of the unstable fluctuation of gold prices, the Prime Minister and Government leaders have issued Resolutions, Official Dispatches, Directives and related documents on solutions to manage the gold market.
Implementing the Government's direction, from June 3, 2024, the State Bank of Vietnam (SBV) has implemented a new gold market stabilization plan by selling SJC gold bars directly to people through 4 state-owned commercial banks and SJC company selling to the market at the price regulated by the State Bank, which has initially had certain effects.
Associate Professor, Dr. Dinh Trong Thinh, an economic expert, also commented that recently, the State Bank has issued many policies in line with the actual conditions of the Vietnamese financial and monetary market, aiming to mobilize the maximum national reserve resources for the import of machinery, equipment and materials. Support the import and export process, increase production, create jobs, and ensure the macro factors of the economy.
At the same time, the gold market's activities support the stability of the exchange rate, although in recent times, the exchange rate has sometimes been relatively high, 7-8% higher than at the end of 2023 .
Source: https://www.nguoiduatin.vn/7-nguyen-nhan-tac-dong-den-gia-vang-tai-viet-nam-a671314.html
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