Price Increase, People Rush to Buy
The gold market is experiencing strange phenomena as prices continue to rise. People are rushing to gold stores to buy and sell. It has been a long time since we have seen people competing to buy or stock up on gold, regardless of the SJC gold price reaching nearly 81 million VND/tael and the highest ring gold price in history of over 68 million VND/tael.
On the morning of March 5, people lined up to buy and sell gold. Photo: Nhu Y
At a gold store on Tran Nhan Tong Street (Hai Ba Trung District, Hanoi) on the morning of March 5, people had to line up and wait 15-20 minutes to enter for transactions. Customers continuously looked at the gold price board and many exclaimed “so high”. Despite the high prices, many people still rushed to buy, with the belief that the longer they hold onto it, the higher the price will be.
Mr. Minh Phuc (Dong Da District, Hanoi) said: “I decided to buy 5 taels of SJC gold at a price of over 400 million VND. For me, the increase in gold price is a good thing and even if it decreases, it’s no problem because I buy for storage purposes, so even with the high prices, I still buy.”
Meanwhile, Ms. Thu Hoa (Hai Ba Trung District, Hanoi) bought 10 taels of gold rings and 2 taels of gold bars. “With low bank interest rates, I only invest in gold. From the beginning of the year until now, I have been continuously buying and selling gold and always making a profit. If I see the price drop below the price I bought, I will still hold onto it,” said Ms. Hoa.
Upon observation, many customers sell their gold within a few months. Mrs. Bich Hang (Thanh Xuan District, Hanoi) sold 18 taels of gold and earned over 1.4 billion VND. “When I bought it, the gold price was less than 74 million VND/tael. Now I’m selling it after just 3 months for a profit. I will buy more if the gold price goes down,” said Mrs. Hang.
Urgent Revision of Decree 24 to “Cool Down” the Gold Market
In an interview with PV Tien Phong, Mr. Nguyen The Hung, Vice Chairman of the Vietnam Gold Business Association, affirmed that if Decree 24 on gold market management is not revised, the domestic gold price will continue to break records in the near future.
According to Mr. Hung, there are many reasons why the domestic gold market has been continuously rising recently. Firstly, the world gold price has been increasing steadily. Currently, the world gold price is at $1,120/ounce. Although this price is still lower than the peak of $1,350/ounce reached last year, the steady increase in the world gold price will definitely lead to an increase in the domestic gold price. With SJC gold bars, the price could exceed 85 million VND/tael, while gold rings may reach over 70 million VND/tael.
Furthermore, according to Mr. Hung, in addition to global factors, the domestic gold price is also increasing due to scarcity while the demand for saving and investment from people is high. In recent years, the State Bank no longer grants gold quotas for SJC gold bars. Many people who own SJC gold bars do not want to sell, causing a discrepancy between supply and demand in the domestic market, leading to rapid increases in the gold price that cannot follow the world gold price.
Regarding the continuous increase in the gold price, Ms. Le Thi Huong Tra, an analyst at the Banking Research Institute, Banking University, analyzed that SJC gold bars are currently priced about 18 million VND/tael higher than the world gold price, while gold rings are priced about 5 million VND/tael higher. This is the highest price difference for gold rings and nearly a record difference for SJC gold bars.
“I believe that the main reason for the recent strong increase in the gold price is the continuous rise of the USD against other foreign currencies. Along with that, the domestic gold price is following the movement of the world gold price, which in reality has not shown any signs of going down, but rather has approached record high levels,” said Ms. Tra.
According to Ms. Tra, conflicts in some places have the potential to spread, causing people worldwide to turn to gold for hoarding and to the USD for liquidity assurance. Therefore, central banks continuously increase their gold reserves through buying. In addition, the current reality is that there is always an increasing demand for gold in the domestic market. Therefore, the gold price will continue to rise, while the price difference between buying and selling is widening, posing risks for investors.
To calm down the gold market, Mr. Nguyen The Hung believes that the State Bank should urgently revise Decree 24 to allow gold imports. If the supply increases to meet market demand, then the SJC gold price could decrease by tens of millions of VND, down to 70 million VND/tael.
The government has repeatedly requested the State Bank to review and propose management solutions for the gold market in the coming time. Most recently, in the conclusion of its regular meeting on March 2, the Prime Minister emphasized many tasks and requested the amendment of the decree on gold market management in the context of fluctuating SJC gold prices. To date, the SJC gold price has crossed the threshold of 80 million VND/tael twice.
