Is Gold’s Rally Here to Stay?

In response to VTC News‘s inquiry, experts predict that both global and domestic gold prices will continue to rise in the remaining months of the year. In Vietnam, the prices of gold bars and gold rings tend to follow the global trend, with the latter witnessing more frequent record-breaking peaks, recently surpassing 81 million VND per tael and approaching the bar gold price of 81.35 million VND per tael.

According to expert Nguyen Tri Hieu, the US Federal Reserve (Fed) may continue to cut interest rates through the end of the year and possibly into early 2025, which would contribute to the rise in global gold prices. Additionally, gold prices are highly sensitive to geopolitical tensions, which remain intense worldwide.

The upcoming US presidential election is also expected to influence gold prices. Whichever party comes into power is likely to cause an increase in gold prices.

Furthermore, the demand for gold from countries like China and India is forecasted to surge with Christmas and the wedding season in Asia approaching.

Given these circumstances, global gold prices will continue to climb, and domestic prices will follow suit.

“The gold bar and gold ring segments are like a balloon; squeezing one end will cause the other to bulge. While gold bars are under state control, gold rings follow the law of supply and demand. Therefore, the price of gold bars may remain relatively stable, but the price of gold rings is likely to surge. These are important considerations for investors,” said Dr. Nguyen Tri Hieu.

Echoing this view, gold expert Tran Duy Phuong attributed the global gold price surge to three main factors:

Firstly, central banks worldwide have been lowering interest rates. When interest rates drop, money tends to flow into gold or stocks instead of currency or bond channels. The resulting increase in demand drives up gold prices.

Secondly, geopolitical tensions in the Middle East have made gold a safe haven for investors.

Moreover, historical data shows that gold prices tend to rise during US presidential election years.

Since the beginning of the year, gold prices have climbed by approximately 600 USD per ounce, and according to Mr. Phuong, there is still room for further growth in the remaining months, with a potential increase of around 100 USD per ounce. However, in the upcoming week, gold prices may enter a correction phase due to profit-taking by investors. The price may dip to around 2,500 USD per ounce before rebounding strongly in Q4.

“Gold prices often fluctuate in a sinusoidal pattern. At this point, we may be at the peak of a cycle. Investors should exercise caution when deciding to accumulate gold. While purchasing gold at this stage can still be profitable, the returns may not be as high due to the peak pricing. Instead, consider buying when the global gold price undergoes a correction in the near future,” advised Mr. Phuong.

Are the consecutive records in gold ring prices abnormal?

According to Dr. Nguyen Tri Hieu, domestic gold ring prices are currently very high and close to global prices. With global gold prices surpassing 2,600 USD per ounce and expected to climb further, it is challenging to prevent gold ring prices from rising.

“Whether gold rings will be subjected to the same controls as gold bars remains unknown. However, at the moment, gold ring prices have not reached a level that could cause market instability, so such control is unlikely to be implemented anytime soon,” he added.

Nonetheless, Mr. Hieu finds it unusual that gold ring prices have climbed so close to gold bar prices, only differing by about 1.5 million VND per tael. “While it is not entirely appropriate to compare gold bars and gold rings, as one is controlled and the other is not, gold bars typically offer higher liquidity and carry the prestigious SJC national brand. Gold rings, on the other hand, have various competing brands. Therefore, it is quite abnormal for gold ring prices to be so close to gold bar prices,” he explained.

Mr. Hieu also pointed out irregularities in the gold bar market. Gold bars are currently regulated under the State Bank of Vietnam’s (SBV) price stabilization program, which has successfully lowered prices from over 92 million VND per tael to around 78 million VND and now to 83.5 million VND per tael. However, in reality, it is challenging for those in need to purchase gold bars at these prices, as the market does not operate according to supply and demand principles. “While the demand is high, there is a lack of supply, resulting in a stagnant gold bar market. We can say that the gold bar market is stable in terms of pricing, but not in terms of supply and demand,” he remarked.

In contrast, Mr. Tran Duy Phuong considers the surge in gold ring prices to be normal, as they are influenced by global gold prices.

“The increase in global gold prices drives up the cost of gold raw materials. With global gold prices hovering around 2,630 USD per ounce and various taxes, fees, and transportation costs to consider, the price of gold rings in Vietnam, after conversion, remains reasonable at over 80 million VND per tael. Factoring in production and operational costs, the selling price of gold rings is still within an acceptable range. If gold ring prices were to rise or fall independently of global gold prices, then it would be a cause for concern,” Mr. Phuong elaborated.

The recent sharp increase in gold ring prices can be attributed to the significant rise in global gold prices. The proximity of gold ring prices to gold bar prices is due to the fact that SJC gold bars are price-controlled by the SBV and cannot freely fluctuate with the market. Consequently, the price adjustments of SJC gold bars lag behind those of gold rings,” he concluded.