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  • Writer's pictureVirtus Prosperity

THE FLUCTUATIONS OF GOLD PRICES IN VIETNAM FROM 2000 TO 2023

Gold, a commodity traded on the market, is known for its high liquidity and is recognized as a special form of currency worldwide. Over the past two decades, the gold market in Vietnam has witnessed significant fluctuations, presenting both opportunities and challenges for large institutional entities operating in the investment and financial sector.


Global Significance of Gold:

- Gold is found on all seven continents, with a total of 166,500 tons mined throughout history. Predominantly used for jewelry (50.5%), followed by private investment (18.7%), government reserves worldwide (17.4%), and industrial applications (13.4%).

- South Africa, historically the largest gold reserve holder, has accounted for an average of 40% of global gold production over the past 130 years. China surpassed South Africa in 2011 to become the world's largest gold producer.

- As of the end of 2022, the Federal Reserve of the United States, the nation's central bank, holds the largest national gold reserve in the world, at approximately 8,133.5 tons. This figure is substantial, nearly equivalent to the combined gold holdings of Russia, Germany, and Italy.

- From 1991-2021, the country produced and consumed nearly 50 tons of artistic jewelry gold annually, with Ho Chi Minh City alone accounting for over 80% of this figure, approximately 40 tons. Recent export revenues for artistic gold jewelry have ranged from 20-30 million USD annually, with Vietnamese jewelry finding markets in Asia and Europe, including countries like Germany, Denmark, and France.

- According to a report by the World Gold Council (WGC), the demand for gold bars, ingots, and coins from the Vietnamese market reached 41 tons in 2022, a 32% increase from the previous year. The same report highlighted Vietnam's leading position in Southeast Asia in terms of jewelry consumption, with 18 tons in the past year, the highest in four years.

In 2022, Vietnamese consumers collectively consumed 59 tons of gold, a notable increase from 43 tons in 2021.


Measurement Units of Gold

In the Vietnamese jewelry industry, gold is measured in units such as "lượng" (tael), "cây", or "chỉ". One unit weighs 37.5 grams, and one "chỉ" is equivalent to 1/10 of a unit. On the global market, gold is measured in ounces or troy ounces, with one ounce equaling 31.1 grams.

The purity of gold, expressed in karats (K), signifies the proportion of pure gold in an alloy. For example, 24K gold contains 99.99% pure gold, while 18K gold contains approximately 75% pure gold (18/24), commonly used in jewelry.

Factors Influencing Gold Prices

Global Factors: The fluctuation of the US dollar, US deposit interest rates, oil price movements, inflation levels, and key indicators of the US economy, as well as geopolitical conflicts, all contribute to the volatility of gold prices on the world stage.

In Vietnam, domestic gold prices are influenced not only by global gold prices but also by local supply and demand dynamics and the domestic jewelry market.

Gold Prices in Vietnam Over the Past 20 Years:

Over a decade, from 2000 to 2010, the history of gold prices in Vietnam saw significant fluctuations as follows:

Period from 2000 to 2003: The gold price chart showed an upward trend. Particularly, in February 2003, this period was considered the peak of gold prices in over four and a half years. The sudden surge in prices was suspected to be a result of the US and UK's war with Iraq.

The period from December 2003 to January 2004: Gold prices surpassed the threshold of 400 USD/ounce (approximately 792,000 VND/tael). This marked the highest point for gold prices since 1988 - 2004. By October 25, 2004, gold prices were recorded at approximately 814,000 VND/tael.

In the subsequent years, gold prices continued to rise, reaching approximately 2,870,000 VND/tael by 2009 and 2010.

The period from 2010 to Present

Looking at the gold price chart for SJC gold from 2010 to 2023 below, we can observe an overall upward trend with three significant fluctuations. The first was in 2011, the second occurred at the end of 2012 and the beginning of 2013, and the third was the recent surge during the peak of the Covid-19 pandemic.

Despite the price difference between domestic and global gold due to factors such as exchange rates, import taxes on raw gold, seasonal influences, and supply-demand imbalances, gold prices in the Vietnamese market are generally determined by global gold prices. Therefore, any fluctuations, whether an increase or decrease, in global gold prices, also impact the domestic gold price chart.

Source: Virtus Prosperity Research


The period from 2008 to 2011 witnessed the global economy struggling to recover from the financial crisis. Central banks worldwide resorted to massive money printing to support their economies, causing gold prices to skyrocket. Within three years, this precious metal surged by 200%. Additionally, by the end of 2011, domestic gold prices had also risen by 18.2% compared to the end of 2010.

The onset of a downturn: 2012 to 2015

The year 2012 marked unprecedented shifts in the regulatory landscape, particularly with the State Bank of Vietnam's resolute determination to "de-goldify" the specialized market. Despite a slower pace, gold prices continued to rise in 2012, buoyed by the low-interest rate environment and investors seeking gold as a hedge against the escalating European debt crisis and other global economic instabilities. However, while the US dollar gained favor among investors, gold's role as a "safe haven" seemed to have weakened compared to previous years.

The start of an uptrend in 2019 and the explosive surge from 2020 post Covid-19

Source: Virtus Prosperity Research


Price Movements and Economic Cycles

Gold prices undergo fluctuations in cycles, often inversely correlated with economic cycles. Economic cycles directly and indirectly affect the gold market. Specifically, this precious metal tends to decrease significantly during periods of economic prosperity and shine brightly during economic downturns. However, economic cycles are never identical, and gold prices also vary in different crisis scenarios.

Gold prices surge to their first peak during the late stages of a robust economic upswing, a precursor to a recession. Subsequently, gold prices typically experience a sharp decline after signs of economic recovery and stock market rebounds.

Discrepancy between Domestic and Global Gold Prices

As of November 4, 2023, the world gold price is approximately USD1999.90/ounce. When converted to Vietnamese dong at the same day's exchange rate, it equates to around VND59.5 million/tael (1 tael is approximately 0.829 ounces, exchange rate on 4/11: VND24,690 per USD1). This remains lower than the selling price of 1 tael of SJC gold on the same day, which is over VND70 million VND.

The significant difference between domestic and global gold prices primarily reflects the supply-demand relationship. The demand for physical gold domestically currently outweighs the supply, resulting in higher domestic gold prices compared to international ones.

Regarding demand, despite economic challenges in Vietnam in 2023, the production of fine jewelry gold remains robust, driving demand for raw gold materials to a high level. Meanwhile, the formal import of raw gold has not yet resumed, as regulatory authorities continue to enforce monetary policies to ensure stability in both the gold market and the overall currency market. This includes the imperative to conserve foreign exchange reserves and stabilize exchange rate policies.

While the State Bank of Vietnam's Decree 24 has contributed to market stability, certain provisions within the decree still pose challenges. This is due to the central bank's monopoly on importing and producing SJC-branded gold bars, leading to high demand but limited supply, causing SJC gold prices to soar and diverge significantly from global prices.

In summary, due to gold's special position in the global political and economic system, investors have excellent opportunities to profit from this investment channel, whether the market is rising or falling. The key is for traders to possess in-depth and comprehensive knowledge, exercise caution in their transactions, and closely monitor market developments to leverage the full potential of this precious metal.

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