In the past two weeks, starting from December 13, 2023, gold prices in Vietnam have experienced a remarkable surge, soaring from VND73.5 million per tael to over VND80.3 million per tael (SJC gold), marking an almost 9% increase in less than half a month. This stands as the highest price level in recorded history. Acknowledging this impressive growth, especially amidst the current market uncertainties with deposit interest rates below 5% per annum, volatile stock markets, and uncertain real estate trends, becomes imperative.
Internationally, gold is trading at $2,050 per ounce, with fluctuations in this range. Higher interest rates boost the yields of assets such as U.S. Treasury bonds, attracting investors. However, in periods of low interest rates, anticipated to decrease further, demand for non-interest-bearing assets like gold becomes relatively more appealing.
GOLD SPOT PRICES
The yield on 10-year U.S. Treasury bonds has declined from the 16-year high of 5% in mid-October to 3.8% as of December 29.
Source: Investing.com
Investors and financial experts predict potential interest rate cuts in the coming year, making gold prices 'entirely possible' to surpass the record high set on December 4, 2023, at $2,148 per ounce. Speculations about exchange rates also exert pressure on the U.S. dollar, once again making gold more attractive. Higher interest rates tend to increase the value of the currency by attracting foreign capital, and vice versa.
The U.S. dollar has depreciated by 6% since the beginning of November 2023 against a basket of six major currencies. As gold is priced in U.S. dollars, the devaluation of the greenback has made it less expensive for foreign investors, potentially boosting gold demand and, consequently, prices.
Source: Investing.com
Investors often view gold as a safe haven due to its tangible, scarce nature, and theoretically, its ability to retain value. Gold prices have risen by 10% this year, as geopolitical risks appear to be evolving. Factors such as conflicts between Russia and Ukraine, Israel and Palestine, along with trade tensions between the U.S. and China, concerns about developments in the South China Sea, and actions of certain nations in the region contribute to this heightened uncertainty.
It is noteworthy that an increasingly tense world has prompted central banks in emerging markets to accumulate precious metals. Policy planners in these countries, apprehensive about the freezing of Russia's foreign exchange reserves in the West, have rushed into gold as an alternative store of value they deem safer.
According to the World Gold Council, central banks in emerging markets purchased an average of 473 tons of gold per year from 2010 to 2021. However, last year, they bought 1,100 tons, and in the first three quarters of this year, 800 tons. This rapid buying pace 'may continue for many years, if not decades.' Nearly 1/4 of central banks surveyed in May stated plans to increase gold reserves in the next 12 months.
VIETNAM GOLD PRICES
Financial expert Nguyen Tri Hieu analyzes the current situation: 'Currently, domestic gold prices are significantly higher than global prices. The buying price domestically is still higher than the selling price, and the domestic gold market is not interconnected with the global market for adjustments. Perhaps, allowing some gold businesses to import global gold should be considered to synchronize gold prices with the world.'
Immediately after reaching its peak, Prime Minister issued Directive No. 1426/CD-TTg on December 27, 2023, addressing the Governor of the State Bank of Vietnam and Ministers of Public Security, Industry and Trade, Finance, Justice, Information and Communications, and the Inspector General of the Government Inspectorate, directing measures for managing the gold market. As of now, gold prices have sharply decreased to around 76 million VND per tael for selling and below 73 million VND per tael for buying, indicating a significant price difference between buying and selling."
Source: Internet
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