The Golden Market: Still Not as Stable as Hoped?

Gold Buying Remains Challenging

The State Bank of Vietnam’s (SBV) decision to sell gold directly to four commercial banks and SJC Company, which then sell to the people, has cooled down the domestic gold market over the past two months, narrowing the price gap with the world gold price.

Currently, gold is traded around the 78 million VND per tael mark for buying and 80 million VND per tael for selling. Meanwhile, gold rings have seen a significant increase of 500,000 to 700,000 VND per tael, approaching the SJC gold price. Accordingly, the SJC 9999 gold ring closed on August 17 at 77-78.4 million VND per tael (buying – selling).

PNJ gold rings are at 77-78.39 million VND per tael; DOJI Hung Thinh Vuong rings are at 77-78.4 million VND per tael; Bao Tin Minh Chau’s plain rings are at 77.08-78.38 million VND per tael; and Phu Quy plain rings are at 77.05-78.35 million VND per tael.

As can be seen, the price of gold rings and the national brand gold is very close. Domestic gold prices are not much higher than world gold prices as they used to be. This shows that the goal of bringing domestic gold prices closer to world gold prices has almost been achieved.

Free gold is also traded close to the gold price quoted by gold companies. The gap is only about 500,000 VND per tael.

However, it is worth discussing that due to the high demand for gold ownership, many people still complain about the difficulty of registering to buy gold. Although many banks have advised customers to open an account at the bank to buy gold for convenience in transactions, it is not easy to buy gold. Ms. N.M.P. (from Thanh Xuan district, Hanoi) said that she had failed twice to buy gold online despite filling in all the information.

Many customers who want to buy gold urgently have turned to social media and registered with gold buying and selling forums. Ms. N.T.D. (from Hai Ba Trung district, Hanoi) shared that she had just sold two plain gold rings to her friends. “Instead of going to a store, which takes time and involves complicated paperwork, I asked my friends if anyone wanted to buy two gold rings. The sale was quick and the price was reasonable,” said Ms. D.

Let the Gold Market Operate According to Market Principles

Mr. Shaokai Fan, Regional Director for Asia Pacific (excluding China) and Central Bank Director at the World Gold Council, told the media that gold bar and gold coin demand in Vietnam in Q2 2024 increased by 30% over the same period in 2023 to 12 tons. Total demand for gold bars and gold coins in the first half of 2024 reached 26 tons, the highest level since 2014. Investors continue to turn to gold bars and gold coins as a safe storage channel to cope with inflation, a weakening local currency, and poor performance in the domestic stock and real estate markets. Jewelry demand fell partly due to high prices and partly due to slow economic growth, which affected buyer psychology.

The SBV’s recent gold management solutions aim to stabilize the domestic gold market and narrow the gap between domestic and world gold prices. According to experts, gold is not an essential product, nor is it a restricted commodity, so there is no need to tightly manage it as is currently the case. Investing in gold is also the legal right of the people.

Attorney Truong Thanh Duc, Director of ANVI Law Firm, said: “Gold is not an essential product or a daily necessity. Simply put, it is just a product that people consider as an asset for accumulation and savings. There is no regulation prohibiting people from buying large amounts of gold, as long as anti-money laundering regulations are complied with. It is unreasonable to have too many tight regulations on gold trading.”

Expert Tran Duy Phuong said that the SBV should not continue to administratively intervene in the gold market. It is time to let the gold market operate according to its own rules. The possibility of a resurgence of gold price surges as in the past is unlikely. Therefore, the SBV should consider letting the market determine the gold price, allowing equality among gold sellers, and letting people buy gold from wherever they want.

In case the SBV still decides to participate in stabilizing the market, Mr. Phuong suggested expanding the list of gold sellers. Instead of just four state-owned commercial banks and SJC Company as at present, other banks should be allowed to sell gold. These banks can buy gold from the SBV to sell, helping to meet the people’s gold demand.

In the long run, experts say it is necessary to consider ending the SJC gold bar monopoly and allowing gold material imports based on enterprises’ needs. Quotas for gold material imports could be allocated to enterprises, or the SBV could directly import and then redistribute.

According to Mr. Phuong, if the issue of gold material imports is not resolved, black market gold trading will continue, pushing risks to people due to a lack of quality supervision.