Gold exceeds 101 million VND/tael, experts predict unlikely event

Why is the price of gold so high?

Sharing with reporters, Associate Professor Dr. Nguyen Huu Huan, Ho Chi Minh City University of Economics, said that US President Donald Trump's policies have shaken the markets, along with concerns about recession and inflation in the US, which are the main factors affecting gold prices.

The US Federal Reserve (Fed) is expected to cut interest rates 1-2 times this year, further increasing the price of gold. When interest rates decrease, gold is still one of the potential investment channels.

"When the world gold price drops by a few dozen USD, the domestic gold price can drop by a few million VND per tael, which is normal. The reason is that most first-time investors do not have much experience, they mainly 'surf', so when the market fluctuates, they are afraid of losing money and sell off immediately.

If conflicts, currency wars and trade wars become more intense, gold prices could reach even higher peaks,” Mr. Huan predicted.

In response to some predictions that the world gold price could reach 3,100-3,200 USD/ounce by mid-April, Mr. Huan said that whether the gold price can increase to that level or not depends on the level of instability in the world economy and global geopolitics.

"If the war in the Middle East remains tense, accompanied by a continued trade war, gold prices will certainly set a new record. However, it is very difficult to make accurate predictions at the current stage. Gold prices are more difficult to predict because they are affected by the subjective will of leaders like Donald Trump," said Mr. Huan.

Domestic gold supply is scarce, however, high demand for gold will not occur because prices are already too high.

"When the price of gold is at tens of millions of dong per tael, many people will boldly buy; but when the price rises to hundreds of millions of dong, they will be hesitant. When gold establishes a new stable price level, then the movement will be stronger. Currently, many people will wait to sell," Associate Professor, Dr. Nguyen Huu Huan assessed.

Also sharing with VietNamNet, Dr. Le Xuan Nghia - member of the National Financial and Monetary Policy Advisory Council, commented that gold prices will continue to increase because in the world, gold mining output increases by about 1.5% each year, while the world's money supply increases by about 3.5%. In the long term, the amount of money increases more than the amount of gold, so gold prices will continue to increase.

The world gold price has reached over 3,085 USD/ounce, according to Mr. Nghia, mainly due to concerns about the US tariff policy and the retaliation policies of other countries, which may cause the US economy and some other countries to slow down and inflation to increase.

"The world economy may slow down by 0.3%, inflation may increase by 5% compared to the initial forecast. The pressure on the US economy is quite large, causing the USD to fall sharply. At that time, gold prices will increase.

From now until the end of the year, if the Fed cuts interest rates about twice, each time by 0.25%, US interest rates will still be around 4%. Along with complicated geopolitical issues, investors are worried and looking for gold," Mr. Nghia analyzed.

Domestically, due to the State Bank's gold management policy, this agency also has a monopoly on gold import and export, so the domestic gold price and the world price are not completely linked, depending largely on the supply through unofficial channels. This pushes the domestic gold price higher than the world gold price.

Mr. Nghia commented that this is absurd. Therefore, it is necessary to end Decree 24 soon and move towards liberalizing the gold market.

Difficult to reduce to 70-80 million VND/tael

According to Associate Professor Dr. Nguyen Huu Huan, gold prices fluctuate more due to geopolitical and global economic instability than seasonal factors. Seasonal factors only occur when gold prices are stable and the world economic situation is relatively "calm". Currently, gold prices increase regardless, even during the low season if the trade war is tense.

Mr. Huan said that the gold price has increased too strongly, the possibility of adjustment is very high. However, gold has established a new price level, it is difficult for it to fall back to the mark of 70-80 million VND/tael.

Sharing the same opinion, Dr. Le Xuan Nghia said that usually when the gold price has a strong increase, there will be a decrease. However, when the gold price has increased by more than 101 million VND/tael, it is very difficult to reduce it to 70-80 million VND/tael.

Therefore, Mr. Nghia recommends that you should not invest in gold at this time. You should invest when the wave is down, because when the price is at its peak, it will be very risky.

"You should only buy when the price is red, not when the price is green, avoid chasing the market, the risk will be very high. You should not buy at this time, you should wait for strong correction sessions, buying will be safer. For sellers who take profit, this time is also an opportunity to sell part of the portfolio and wait for the price to decrease to buy back at a lower price," Mr. Huan suggested.

According to experts, gold is a safe investment channel, but when the gold price is above 101 million VND/tael as it is now, it is not a safe channel.

But if you buy gold for the long term, it is safe, but the rate of return is low. In the past 20 years, the rate of return, even during times of strong price increases, has been only 8%, lower than investing in stocks and real estate and only higher than saving.

(According to Vietnamnet)

Source: https://baoyenbai.com.vn/12/348043/Vang-vuot-101-trieu-dongluong-chuyen-gia-du-bao-dieu-kho-xay-ra.aspx