Bustling gold trading scene on the day gold price peaked on November 29. (Video: Minh Duc)
The last months of 2023 have seen an incredible acceleration in gold prices in the Vietnamese market. On November 29, 2023, the price of SJC gold bars soared to 74.5 million VND/tael, the highest in history, breaking the record of 74 million VND set in March 2022.
Comparing gold prices from the beginning of 2023 until now, we can see the extremely "hot" increase in gold prices.
Specifically, from the beginning of January 2023 to November 29, 2023, the price of SJC gold bars increased by more than 7 million VND/tael, from 67.4 million (January 15, 2023) to 74.5 million VND/tael on the morning of November 29. Meanwhile, the price of gold rings also increased by 7.35 million VND/tael, from 55.05 million VND/tael to 62.1 million VND/tael.
The price of gold has now surpassed the historical peak of 74 million VND/tael on March 8, 2022 and is the most expensive ever. The price of gold rings is also the highest of all time.
In 2023, after continuously increasing in January 2023, at times exceeding 69 million VND/tael, the domestic gold price decreased and fluctuated within a narrow range of around 67 million VND/tael for more than 5 months, from mid-February to the end of July.
However, since mid-September, gold prices have been remarkably stable, continuously increasing, reaching VND69.35 million/tael on September 19, the highest level in a year.
By mid-October, the price of gold exceeded 70 million VND/tael. Since then, the price of gold has increased sharply. In just over a month, the price of gold has increased by more than 4 million VND/tael.
The price of domestic gold rings also recorded an increase corresponding to that of gold bars. In February 2023, the price decreased by VND 400,000/tael, to VND 54.65 million. From March 2023, gold rings traded around VND 56 - 57 million, lasting for 6 months.
By November, the price of gold rings continuously increased, exceeding 59 million VND/tael, exceeding 60 million VND/tael and now exceeding 62 million VND/tael, the most expensive in history.
Responding to VTC News , economic expert Associate Professor Dr. Dinh Trong Thinh stated 3 main reasons why domestic gold prices have been increasing continuously, causing consumers to go from one surprise to another.
Firstly, it comes from our tighter management of gold transactions. After the State Bank issued Circular 12 amending and supplementing a number of articles of legal documents regulating the implementation of the task of managing state foreign exchange reserves, there were rumors that gold bullion trading was not allowed. This made many people think that buying gold bullion would be difficult. Therefore, they rushed to buy, causing the price of gold to increase.
Although gold trading businesses have confirmed that people can still buy gold normally, until now, gold is still "hot".
Second, interest rates have been continuously decreasing recently, making investment difficult. Some people who have money deposited in banks do not earn much interest. Meanwhile, there are few investment opportunities, because businesses are having few orders and are shrinking. Although the last two months of the year are predicted to be a boom period for production and business, it seems that investors do not have much confidence. Therefore, the cash flow tends to flow to precious metals such as gold. The mentality of "buying gold to keep the price" makes many people prioritize hoarding gold.
Third, as the end of the year approaches, the demand for gold jewelry for weddings and engagements increases, which may cause gold prices to rise. Raw materials for production are scarce, the supply of SJC gold bars is limited, combined with the increase in world gold prices, making domestic gold prices increasingly hot.
Economist Dr. Nguyen Tri Hieu also analyzed that domestic gold prices are being affected by world gold prices. In addition, there are other reasons.
The macro economy is in a difficult situation so investors are looking for an investment channel to generate high profits.
In addition, other investment markets have not seen any improvement, making gold dominant.
“The stock market is sluggish, real estate is stagnant, while bank interest rates are decreasing, only foreign currency and gold are increasing. When investors cannot choose stable and profitable investment channels, they will turn to gold,” said Dr. Nguyen Tri Hieu.
Sharing the same view, Dr. Nguyen Minh Phong said that the world gold price has recently increased to more than 2,000 USD/ounce, in the context of escalating geopolitical tensions. This has affected the domestic gold price.
This morning, the world gold price also set a record price. Specifically, the world gold price today listed on Kitco was at 2,048 USD/ounce (at 8:40), an increase of 35 USD/ounce compared to early yesterday morning.
Precious metals prices have surged on expectations that the US Federal Reserve has ended its interest rate hikes. These expectations have been heightened by recent comments from Fed officials. The less hawkish views have put pressure on the US dollar and supported the precious metals market.
World gold prices have increased sharply in the past few weeks, after the US Federal Reserve (FED) signaled that it would stop raising interest rates at its meeting in November and the coming months and could start cutting interest rates from mid-2024. The FED's halt in raising interest rates shows that the country's monetary policy has begun to shift to a looser stance, and the USD index (DXY) has plummeted, helping gold prices benefit.
The Russia-Ukraine conflict has been going on for a long time and shows no signs of stopping and recently the conflict between Israel and Hamas - although there has been a ceasefire but it is not clear yet. When the geopolitical situation is tense, it will affect the world economy, oil prices and in this context, some banks and investment funds will turn to a more cautious trend and invest in gold.
Demand for gold jewelry at the end of the year also increases in some countries such as the US, Europe or Asia including China, India, Vietnam is also in the wedding season.
Equally important is the demand for gold from central banks. As of the third quarter of 2023, central banks had bought about 800 tons and could exceed 1,000 tons this year.
Stable or no increase in gold supply while increasing demand pushes gold prices to record levels. Many forecasts show that the price of precious metals in the world market may continue to increase in the next 1-2 months and head towards the 2,050 USD/ounce area or break the historical peak at 2,080 USD/ounce.
Many experts have predicted that 2023 will bring an all-time high for gold. Eric Strand, manager of the AuAg ESG Gold Mining ETF (which includes 25 gold mining companies), said: “A new bull market will begin, with prices exceeding $2,100/ounce. By the end of 2023, gold will be at least 20% higher.”
Sharing on Kitco News, chief economist Thorsten Polleit of Germany-based Degussa bank predicts that gold prices will end 2023 at around $2,200/ounce and will still be considered a safe haven asset in the context of the struggling bond market and the weakening USD.
Add to that the complicated developments in the banking sector of the world's number one economy. The price of precious metals will increase when the money supply is stronger, interest rates are lower and the troubles in the banking sector spread to the general economy.
Goldman Sachs predicts that gold prices will average $2,078 per ounce in the third quarter of 2023 and then continue to increase to $2,108 per ounce in the fourth quarter of this year. With this forecast, gold is estimated to have an average price of about $2,021 per ounce in 2023.
Goldman Sachs even believes that the gold price increase will not stop there and this precious metal will record an average price of 2,175 USD/ounce in 2024. After that, the price will decrease to 2,087 USD/ounce in 2025 and 2,000 USD/ounce in 2026.
In fact, the price of gold has now reached 2,045 USD/ounce and shows no signs of stopping.
Although gold prices are expected to continue to rise, many experts still warn people to be cautious when investing.
Expert Nguyen Minh Phong said that the price of gold is increasing but certainly not in the long term. Recently, the price of gold has often increased rapidly but also decreased very quickly.
"Gold prices are unstable, so investors should not invest heavily, especially swing traders should be very careful," said Mr. Phong.
Associate Professor, Dr. Dinh Trong Thinh also advised: "Gold buyers should be vigilant when domestic gold prices are continuously increasing, not completely in sync with world gold prices. In the long term, domestic gold prices will also fluctuate up and down according to world prices, so a reversal is entirely possible."
Meanwhile, Dr. Nguyen Tri Hieu commented that the gold market is always unstable. The increase in gold prices does not mean that they will increase steadily from now until the end of the year. "The important thing is to never borrow money from others to invest in gold. If the gold price decreases contrary to expectations, gold buyers will have big financial problems. If you have the financial ability to invest in gold at this stage, you should only invest 1/3 of your savings and not put all your eggs in one basket," said Dr. Nguyen Tri Hieu.
“If I were to rate on a scale of 10, I would say the gold market gets 7 points, the stock market gets 4 points, real estate gets 5 points, and even though banks have low interest rates, they are the safest market and still generate consistent profits, so the investment channel in bank deposits is still at the highest level, 8 points,” Mr. Hieu added.
Mr. Huynh Trung Khanh, Vice President of the Vietnam Gold Business Association and Senior Advisor to the World Gold Council in Vietnam, said that there may be a shift from savings to gold, but not much. Investors may only buy a portion of gold to diversify their assets, as evidenced by the fact that demand for gold has not increased dramatically. Normally, world experts also recommend investing only 15-20% of assets in gold, depending on each person's risk appetite.
Some other gold experts commented that the sharp increase in SJC gold price has widened the gap with the world gold price to 14 million VND/tael, while gold rings and jewelry gold are about 2.3 million VND/tael higher than the world price. Therefore, if you want to buy gold, you should buy 24K gold rings and jewelry gold, which will fluctuate closer to the world price, and prevent risks when SJC gold drops sharply again.
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