Increase, decrease suddenly, gold falls into risky zone

Increase and decrease millions of dong in one day

Yesterday, November 30, was another day of strong fluctuations in the price of SJC gold bars with an increase or decrease of 200,000 - 300,000 VND/tael. By the end of the day, the price of each SJC gold bar decreased again to 72.4 million VND for buying and 73.6 million VND for selling. Compared to the highest price of the previous day, the price of each SJC gold bar has dropped by 1 million VND, while the world gold price has remained unchanged. This is completely opposite to the vertical increase of Vietnam's gold price compared to the sluggish world price. Specifically, at the end of yesterday, the international gold price was at 2,045 USD/ounce, an increase of 65 USD/ounce in November. Equivalently, world gold increased by about 1.9 million VND/tael in November, lower than the increase of 3.5 million VND of SJC gold bars. The increase in November has pushed the price of SJC gold bars up a total of about 7.5 million VND/tael since the beginning of the year, equivalent to an increase of nearly 11%.

At the same time, the difference between the domestic gold buying and selling prices also increased to 1.2 million VND per tael during the peak days instead of only about 700,000 - 800,000 VND as in early November... Similarly, the price of SJC's 4-number 9 gold rings also increased sharply by nearly 3 million VND/tael in November, equivalent to an increase of nearly 5%. Gold rings set a record when SJC bought 61.3 million VND and sold 62.4 million VND/tael.

Domestic gold price is 13 - 15 million VND/tael higher than world gold price

Faced with the erratic fluctuations of gold prices, Mr. Nguyen Ngoc Trong, Director of New Partner Gold Company, analyzed: After a long period of trading below 2,000 USD/ounce, world gold has broken the 2,000 USD/ounce mark thanks to the forecast of an upward trend by many experts and organizations. Therefore, purchasing power in the domestic gold market has also increased. In addition, gold companies are worried that prices will increase, so they always list high prices, at the same time widening the buying and selling difference to anticipate the gold buying trend of the people. Another reason is that the supply and demand of gold in the market is not abundant, so when there is buying or selling power, the price will increase or decrease more suddenly.

The question of gold price manipulation was raised when the international gold price increased by a few dozen USD, equivalent to only a few hundred thousand VND/tael, but domestic gold increased and decreased by millions of VND. However, Mr. Huynh Trung Khanh, Vice President of the Vietnam Gold Trading Association, disagreed, because normally when there is buying power in the market, buyers, regardless of the price, even if the price is increasing, are still determined to buy. While there are no sellers, companies have to raise the buying price higher to attract people holding gold. When supply appears to meet demand and tends to overwhelm buying power, the price reverses. As evidence for this, Mr. Khanh said that on November 29, the gold price increased sharply to a record, many people took profits, leading to a sharp drop in price afterwards. The trading volume on the market is not much, so the price also increased and decreased quite suddenly. In the past 10 years, when Decree 24 on gold market management was applied, the gold price on the market was determined by supply and demand. However, over the past year, the supply of SJC gold bars has become scarce, in addition, raw materials for producing gold rings are not abundant, so the domestic gold price is increasing faster than the international price. Recently, the Vietnam Gold Business Association has also proposed that the State Bank of Vietnam (SBV) allow some business units to import raw gold to produce gold jewelry to meet domestic demand.

Domestic gold prices increase and decrease more shockingly than the world, gold buyers face many risks

USD plunges, supporting gold prices

The main reason given by domestic and foreign economists and analysts for this surge in world gold prices is the plunge in the USD. If in early October, the USD-Index reached 107 points, the highest in the past year, then in November alone, this index continuously plummeted to the lowest level of about 102.6 points. If only counting the past month, this index has decreased by nearly 4%. Normally, market developments show that when the greenback depreciates sharply, the price of gold will increase. The change in expectations of global investors when they sell off the USD heavily and shift their attention to many other assets because they believe that the US Federal Reserve (Fed) has ended the process of raising interest rates and may start cutting in the first half of next year.

According to economist Dr. Dinh The Hien, the sharp decline of the USD in the world market also created a psychology for many investors that the US economy in particular and the world will stabilize again, contributing to the rapid recovery of the US stock market in November. At the same time, the story of the conflict in the Middle East or between Russia and Ukraine still has a psychological impact. Therefore, gold continues to attract the attention of global investors. However, Dr. Hien believes that the price increase momentum of the precious metal this time is not sustainable. Because the US economy in particular or the world in general does not have many reasons to decrease sharply. Meanwhile, the recovery of stocks in many places also shows that investment capital is not only focused on safe haven assets such as gold. Thus, the possibility of adjustment will happen soon.

Domestic gold price is 13 - 15 million VND/tael higher than world gold price

Sharing the same view, financial expert Dr. Nguyen Tri Hieu said that the domestic gold price has increased partly following the world's upward trend. The low value of the USD is the result of the Fed leaving open the possibility of raising interest rates after two periods of keeping them unchanged. However, current figures show that the US is controlling inflation better. This is a sign for many investors that interest rates may cool down, thereby supporting gold. Domestically, other investment channels such as stocks are down, real estate is still quiet, savings interest rates are low... also help make gold more attractive. "Gold is still considered a safe and attractive haven at this time. However, investors also need to be very careful, because gold prices can fluctuate rapidly in a short time," Mr. Hieu warned.

Is there an opportunity for buyers?

Answering the question of whether to buy or sell at this time, Mr. Huynh Trung Khanh said that at the "peak" price of gold, the decision to buy or sell is quite difficult. Buying at a price of around 70 million VND/tael is acceptable, but if the price goes up to 74 million VND/tael, buying will be quite exciting. Of course, those who are holding gold at this time have made a profit, but no one knows whether they have sold at the peak price or not. The issue of buying or selling at this time depends on each person's decision. "However, in many people's investment portfolios, the proportion of gold accounts for about 10 - 20% because the price of gold tends to increase over the years. A few days ago, the price of 2,000 USD/ounce was a resistance level, but now it has become a technical support level for gold. From now until the end of the year, gold is unlikely to fall below this level and the price trend is more likely to increase than decrease," Mr. Khanh predicted.

Holding gold bars or rings, according to Mr. Khanh, is also a factor to consider. The current price of gold bars is unusually high, 13 million VND/tael higher than the international precious metal, making it unique in the gold market. This is an extremely risky factor for gold buyers. In case the market experiences a gold selling force, especially if the State Bank intervenes in the market, the possibility of the price dropping by tens of millions of VND/tael is also possible. Especially when Circular 12 of the State Bank amends and supplements a number of articles of legal documents regulating the implementation of the task of managing state foreign exchange reserves officially takes effect, opening up a legal corridor for import and export as well as intervention in the gold market. As for gold rings, the price currently fluctuates up and down in the same direction as the world price, with a price lower than gold bars by about 10 million VND/tael, so the level of holding will be safer.

Financial market expert Phan Dung Khanh further analyzed that the current demand for gold is not as high as when the gold price peaked at 2,075 USD/ounce in August 2020. Therefore, from now until the end of the year, the precious metal cannot repeat this peak. In the long term, there is still a chance for gold to increase in price, but it is also very difficult to make a profit of 10% from the current price, equivalent to about 200 USD. For the Vietnamese market, currently other investment channels such as stocks and real estate are weakening, at a low level, but in terms of opportunity, it is a potential recovery. Not to mention the profit margin of those who have experience in the stock market, they can make a profit of 10% within 1-2 weeks. "Since the beginning of the year, although the general VN-Index has decreased, many stocks have increased 2-3 times. For these people, the profit from gold is not attractive enough. For those who are familiar with accumulating gold or also choose gold as an investment channel, they must hold it for at least 6 months or more. However, buyers need to consider the high risk factor due to the large price difference between SJC gold bars and the world," said Mr. Phan Dung Khanh.

"The general trend is that domestic gold will also follow the world. Those who do not want to take high risks can choose to buy SJC gold bars and must hold them for the medium and long term to make a profit. But if for some reason the difference between the price of SJC gold bars and the world price is shortened, the buyer will suffer heavy losses. Not to mention the difference between the buying price and the selling price will also change. Those who choose gold rings will have lower prices, the lower the difference between domestic and foreign prices, the lower the risk. But gold rings usually follow the world price so they will fluctuate more," Mr. Phan Dung Khanh added.

Investing at peak prices is disadvantageous for domestic buyers

The current gold price is already high and in my opinion there is not much motivation to increase it further. Therefore, current gold buyers will face many risks, especially in Vietnam. That is, the gap between SJC gold price and the world price is too high and the possibility of increasing this gap as recently is no longer there. This gap can only remain the same or decrease. If the gap between domestic and foreign prices remains the same as it is now, then when the world gold price increases higher, buyers will make a profit. Suppose that gap is shortened, even if the world price increases, buyers will still suffer a loss. At the same time, adding the gap between buying and selling prices makes the loss even higher. Currently, the demand for buying physical gold in the country is decreasing because a group of young people, especially workers, no longer have the tendency to accumulate and buy 1 or 2 taels of gold to save like their parents did before. As for young office workers, spending more than 74 million VND to buy a tael of gold and not knowing when they will make a profit of 5 or 10 million VND will make them more inclined to save or invest in stocks.

Economist, Dr. Dinh The Hien

You can buy gold but don't put all your eggs in one basket.

Other investment channels are gloomy and the gold market is booming, attracting buyers. The upward trend of precious metals in the coming time is still there. With the above positive signals, it is advisable to buy gold. However, no one knows how the gold price will develop, especially when domestic gold has reached 74 million VND/tael as predicted. Therefore, it is necessary to be more careful before deciding to buy gold. Investors can buy gold but must have money available and only buy 1/3 of the amount they have. Do not put all your eggs in one basket and must monitor the market daily, hourly to avoid risks.

Furthermore, you should not surf gold like stocks because buying and selling at a difference in price can easily lead to losses. When buying gold, you must determine to hold the gold for at least 6 months to 1 year. Absolutely do not borrow money to buy gold for investment because you will face great risks when the gold price reverses and decreases.

Financial expert Nguyen Tri Hieu

Gold prices are forecast to continue to increase in 2024

According to many forecasts on Kitco and from major securities companies around the world, gold is entering a period of price increase in 2023 and will continue to rise in 2024. Some opinions say that gold prices could surpass $2,100/ounce by the end of 2023 and could even reach $3,000/ounce in 2024. Converted equivalently, the gold price is approaching VND90 million/tael. If the current difference remains, each tael of SJC gold bar could reach VND100 million.

On CNBC, experts from Goldman Sachs Bank said that the outlook for gold in 2024 is very bright.

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