Price of gold likely to rise in 2011

Nguyen Thi Cuc, deputy director of Phu Nhuan Jewellery (PNJ), said investors were waiting for an opportunity to buy gold as the gold price dropped under $1,300 an ounce in accordance with current downtrend.

Cuc also said that the prospect for the rising price of gold this year due to the slow recovery of US economy and Europe’s sovereign-debt crisis boosted the metal’s allure.

Cuc said the demand of domestic gold has increased recently when the price of domestic gold price declined to VND35 million ($1,750) a tael (a tael equal 1.2 ounces).

PNJ’s sales at late of last week climbed to 4,000 taels, up 50 per cent against early last week. Cuc expected the demand of gold would continue to jump as Lunar New Year approached, if the domestic gold price was around VND35 million per tael. 

Recently, the state granted quotas allowing some firms and banks to import gold in order to stabilise the gold market and ease the high exchange rate on the black market.

However, gold demand from firms climbs in the run up to Lunar New Year and the exchange rate at the black market is still higher than banks’ so domestic gold prices are much higher than global ones.

Experts predicted that the gold price in 2011 would up 19 per cent against last year. The major cause is that recovery of global economy is slower than prospects. Therefore, gold will be an attractive market for investors and the capital investing in gold market will probably higher than other markets such as foreign currency market, stock market and real state.

Nguyen Thanh Long, general director of Saigon Jewellery Company (SJC) said investors should caution investing in the gold market after prices fluctuated wildly late last year.

If the US economy recovers and the EU economy is stable then the gold price will ease off. Meanwhile, investors will sell gold for business.