Assessing gold prospects for the rest of 2024 and beyond

Senior financial expert Nguyen Tri Hieu

The bullion market is now under control, but gold prices in the domestic market continue to fetch higher compared to the global market. This shows it is hard to contain gold prices amid soaring global rates. Why is this?

The bullion price is always a big issue. Vietnam has succeeded in containing the bullion price, but once the global gold price spikes, it is difficult to contain domestic prices.

When the global price surpassed $2,700 per ounce recently, it pushed the SJC-branded gold bar to VND87-VND89 million ($3,625-$3,708) for buying and selling.

The price of gold rings is also volatile and aligned to international trends as the central bank (SBV) has yet to keep tabs on gold ring price movement.

I think gold ring prices should definitely be contained by the SBV because prices can become ‘feverish’, casting adverse impacts on the macroeconomic situation.

The global gold market is experiencing strong fluctuations due to complex geopolitical developments, especially in the Middle East.

What level do you think gold prices will reach in the near future?

Global gold prices have good potential to rise in the near term, given the unstable geopolitical situation, especially in the Middle East, Europe, and with the US presidential election entering a critical phase. These factors create uncertainty and unpredictability, prompting investors to choose gold as a safe financial haven.

Additionally, gold prices are calculated in US dollars. When the USD's value declined, following the Federal Reserve's decision to lower the benchmark interest rate by 0.5 per cent, it also prompted a rise in gold prices.

Furthermore, with increased demand for gold towards the end of the year, gold could potentially reach $2,800 per ounce this year and possibly hit a new peak of $3,000 per ounce next year.

How does control over gold bar trading affect the market?

Currently, the demand for SJC gold bars, deemed as the national gold brand, is very high, while the supply of gold bars on the market is limited, particularly as global gold prices continue to rise.

In June, when the global gold frenzy drove domestic gold bar prices to soar, at times exceeding VND90 million ($3,750) per tael, it impacted the macroeconomy, forcing the government and the SBV to take control of the bullion market. Consequently, the supply of SJC gold bars was tightened, making it rather hard for customers to buy.

Is it advisable to invest idle funds in gold at this time?

Although global gold prices are projected to continue surging in the near term, investing in gold is currently very risky, as the gold market management policies of the government and the SBV are still uncertain.

Therefore, investing in the gold market now carries high risk, and investors and individuals should be cautious. If there is a need to buy gold, it is advisable to buy only a small amount, avoiding ‘putting all your eggs in one basket’, even though global gold prices are expected to keep on an upward trend.

The domestic and international gold markets have not been interconnected for some time, simultaneously the price of SJC gold is being controlled, with demand consistently exceeding supply.

Given the current market context, which investment channel would you recommend, and is depositing in a bank a good option?

At present, savings interest rates are lower than other investment channels such as stocks, gold, and real estate, but it is safe. Investing in gold is highly risky now, while the stock market is still volatile and real estate prices are high, requiring substantial capital.

Therefore, saving deposits remain the choice for many people, especially those who are risk-averse.

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