In the opening trading day of 2024, the selling price of gold bars was at 75 million VND per tael. Meanwhile, gold rings and jewelry remained nearly the same compared to the end of 2023. However, three months later, the price of this precious metal quickly “fluctuated”.
Last week, the price of gold bars broke the record reaching nearly 85 million per tael, while gold rings also reached a peak of 77-78 million VND. Compared to the beginning of the year, each tael of SJC gold bars became more expensive by 14.8% while gold rings increased by 22.3%.
The rate of return on precious metals also exceeded the 12.6% and 12.8% increase of the VN-Index and VN30-Index, respectively, in the first three months of the year. Compared to the interest rate of 12-month savings deposits, which was low, ranging from 1.15-1.3% in the same period, the rate of return on gold, depending on the type, is even 12-15 times higher.
Gold became the best-performing investment channel in the first three months of 2024.
Reasons for the rapid increase in gold prices
Reasons for the sharp fluctuations in the price of precious metals, making it the best performing investment channel, came from many factors such as increasing demand in the context of low interest rates, and the stock market being a “difficult” investment channel for many non-professionals. The limited supply in the domestic market, combined with the increase in world gold prices, led to the fluctuation in prices of precious metals.
Not only in Vietnam, the world gold price has also fluctuated sharply since March. “Gold prices are higher because it is a safe haven amid geopolitical tensions and the ongoing US election,” Ewa Manthey, a commodities strategist at ING, told Kitco News.
In addition, the increase in the price of precious metals also comes from the net buying activities of central banks. Central banks have increased their gold purchases since 2022. According to the 2023 Gold Trends Demand Report, the net gold purchases from banks exceeded 1,000 tons, and this is the second consecutive year that this group has “accumulated” over 1,000 tons of precious metals.
Previously, analysts at Citibank believed that gold could reach $3,000/ounce next year. However, with recent developments, experts believe that precious metals could reach this milestone sooner than expected.
Stock investment channels pose risks
The VN-Index maintained the 1,200 point zone after Tet, and ended the first three months of the year with a 12.6% increase thanks to the growth of large-cap stocks – bank stocks. The VN-Index has approached the 1,300-point mark in the past three months, but many stocks have not been able to return to their price levels in September 2023, meaning that investors could still lose money if they choose stocks later.
In particular, after the session when the VN-Index “jumped” nearly 60 points, equivalent to 4.7%, the highest drop in the past two years, stocks no longer seem to be an easy way to make money. Pressures from world events such as the escalating Iran-Israel tensions, exchange rate fluctuations, and net selling by foreign investors have all contributed to the sell-off pressure on stocks in the afternoon session on April 15.
To optimize their portfolios and increase the profit opportunities from this investment channel, investors should not panic sell during sharp declines, maintain a stable mindset, and wait for recovery phases to restructure their portfolios.
Will low interest rates attract depositors?
According to our statistics, the 12-month deposit interest rate of banks is at 5% per year. At some state-owned banks, the downward trend in interest rates is still the general trend. Vietcombank and VietinBank reduced interest rates by 0.1%-0.2% for all terms. Interest rates at private banks tend to be more diversified, with ACB, TPBank, Techcombank, VIB, Sacombank, SeABank, ABBank, Oceanbank, and CBBank reducing interest rates by 0.1-0.5%, while at SHB, Eximbank, Kienlongbank, and VPBank… savings interest rates are showing signs of increasing again.
The return rate of the savings deposit channel was 1.15-1.3% in Q1/2024, much lower than gold in the same period. Except for a few periods of rapid increase such as the end of 2022, in general, savings deposits find it difficult to compete in terms of return rates compared to other investment channels. However, this channel is favored by investors with low risk tolerance due to its stable liquidity.
Therefore, in addition to market developments, investors need to consider their risk tolerance, knowledge, and experience to optimize cash flow and profitability.
