For the third consecutive day, domestic gold prices have risen sharply, particularly gold rings setting new records. At the end of March 1st, Saigon Jewelry Company listed SJC gold at 77.8 – 79.8 million VND per tael, increasing half a million VND compared to the early morning hours. After a day of volatility, at around 80 million VND per tael in the morning of February 29th, SJC gold prices continued to decrease then rebounded.
Meanwhile, Bao Tin Minh Chau Company listed gold rings at 65.7 – 66.8 million VND per tael, increasing 350,000 VND per tael compared to the early morning hours. This is the highest price ever of gold rings.
What is worth mentioning is that on March 1st, both gold bars and gold rings increased in opposite directions to the global gold prices. In fact, at times, the global gold prices only increased slightly while domestically, the prices increased by half a million VND per tael. In the past, the domestic gold market has always been “one market, one market” when SJC gold prices have sometimes been 20 million VND per tael higher than the global gold prices, while gold ring prices have been 3 to 4 million VND per tael higher. As of now, although the gap between the global gold prices and SJC gold bars has narrowed, it still remains at 14 to 15 million VND per tael.
In an exchange with Tien Phong Newspaper, Mr. Pham Xuan Hoe, former Vice Director of the National Strategy Institute of Banking (State Bank) stated that it is necessary to soon establish a connected gold market with the world through a gold trading floor. Especially, the SJC gold monopoly needs to be abolished. When there is no longer a monopoly and when it is connected with the international market, gold prices will not be inflated.
“In the meantime, if Vietnam’s management capacity is still unable to cope, one or two gold floors can be put to a trial. However, gold is a special commodity and needs specific regulations, such as how gold trading floors operate, the qualifications required for participation, regulations on margin requirements, regulations on transactions…” said Mr. Hoe.
Investors should reduce their holdings of SJC gold due to the high price Photo: Nhu Y
Currently, the State Bank of Vietnam is managing the gold market according to Decree 24. Prime Minister Pham Minh Chinh has also issued Directive 06, which requires the State Bank to review Decree 24 in managing the gold market and formulate solutions for managing this market in the first quarter of 2024 to “suit the new situation”.
On March 1st, a representative of the State Bank said that they have not been able to amend Decree 24 regarding the management of the gold market. In the near future, the State Bank will coordinate with the Ministry of Public Security to: Inspect and evaluate the gold market, especially the gold bar market; Align with the Ministry of Public Security on the solutions for managing the gold market in the first quarter of 2024 and soon complete the evaluation report, summarizing the implementation of Decree 24 to submit to the Government.
According to Mr. Hoe, in principle, there is no central bank in the world that manages the gold market because gold is a commodity. Central banks only manage foreign exchange gold, gold in reserves (State Bank), and gold reserves of nations. As for imported raw gold used to produce commodities, it can be licensed normally for import by enterprises without any monopoly.
Investors should hold gold for the long term
Mr. Phan Dung Khanh, Director of Investment Advisory at Maybank Investment Bank, believes that the SJC gold price has risen back to near 80 million VND per tael due to the fact that global gold prices have been rising again for the past two weeks. The global gold prices have been down since reaching its peak in December 2023, even though it has rebounded, it has not reached its previous peak in December.
However, Mr. Khanh advises that investors should only hold gold for the medium and long term. In the current situation, 9999 gold can be held for the medium and long term, gold jewelry can be maintained, but SJC gold can be reduced if its proportion is too large. Investors should also consider other investment channels that offer higher returns such as stocks, which have been on the rise since December 2023. Compared to other channels with higher profitability than gold, investors should also consider carefully.
Meanwhile, Mr. Pham Xuan Hoe advises investors to remain calm in the whirlwind of gold prices at present. “Last year, the public saw SJC gold bars gaining over 10% and gold rings gaining 20%. However, the gold market’s developments are still unpredictable in the current context. The domestic gold market is not connected to the global market”, Mr. Hoe said.
