Why is the price of gold rings higher than gold bars?

Experts say that the State Bank's price-fixing policy has caused gold bars, which used to be tens of millions of dong per tael higher than plain rings, to now be a few hundred thousand dong lower.

Recently, each tael of plain gold rings has been purchased by gold shops at a price of 81.5 to 82.5 million VND, equal to or several hundred thousand VND higher than SJC gold bars. When sold to people, the price of gold rings has also increased to approximately the same as gold bars.

This phenomenon is contrary to the past, when a gold bar was often priced tens of millions of dong higher than a plain ring, even though it was essentially 4-number-9 gold.

This is believed by experts to stem from the policy of "fixing" the price of gold bars. of the State Bank while the plain ring still moves according to the international precious metal.

Accordingly, on June 3, the State Bank sold gold bars to four state-owned banks and the Saigon Jewelry Company (SJC), which then distributed them to the public. The price of gold bars sold on the market was equal to the intervention price from the State Bank plus a maximum margin of 1 million VND. In just one week, each tael of SJC gold bar decreased by 9-10 million VND, equivalent to a 10% adjustment. From a "difference" of more than ten million VND compared to gold rings, the price of gold bars is only about 5 million VND higher.

From mid-June to mid-July, the scenario of gold bar prices adjusting slower than the world continued, causing plain rings to sometimes rise close to gold bars.

And in the past two weeks, the world gold price has continuously set records, increasing by 160 USD, or nearly 7%. The domestic gold ring price has also increased at a similar rate, increasing by 4 million VND per tael. Meanwhile, the State Bank does not update the gold bar price daily but only changes it 3 times, each time adjusting the amplitude by 500,000 VND to 1.5 million VND, making the purchase price of plain rings higher than gold bars.

In fact, the supply of gold bars to the market is quite limited compared to before, when there were only 5 distributors with limited quantity. Other licensed businesses in the market almost did not sell gold bars because there was no supply.

In this context, 24K plain rings are a popular investment and accumulation item. However, the supply of plain rings also fluctuates over time and is not abundant. "The purchase price of gold rings is therefore raised by gold shops, close to the selling price and even higher than gold bars," said an expert.

Forecasting the price of gold in the coming time, many experts believe that the precious metal is in an uptrend. However, gold may still face short-term adjustments.

UOB Bank's Global Economics and Markets Research forecasts that gold could rise to $2,700 an ounce in the fourth quarter of 2024, $2,800 in the first quarter of 2025, $2,900 in the second quarter and $3,000 in the third quarter of next year. The main risk to this positive scenario is the possibility of inflation suddenly accelerating again, forcing the US Federal Reserve (Fed) to scale back its expected interest rate cuts. This could lead to a resurgence of the USD and interest rates, which would be detrimental to gold. In addition, a resurgence of the USD for many reasons beyond forecasts could also put pressure on gold.

Vice President of the Gold Trading Association, Mr. Huynh Trung Khanh, shared the view that there is a high probability that gold is still in an upward cycle. This is a safe haven but has achieved outstanding profitability (over 30% since the beginning of the year) compared to many other forms of investment. However, according to him, investors should only allocate 20-25% of their assets to diversify their portfolio instead of "putting all their eggs in one basket".

Source