Gold escalates to near VND55 million per tael

The price of gold in Vietnam approached VND55 million per tael on July 23.

Customers buy gold in Ho Chi Minh City. (Photo: SGGP)

Customers buy gold in Ho Chi Minh City. (Photo: SGGP)

Particularly, Saigon Jewelry Company bought gold at VND53.5 million per tael and sold at VND54.8 million per tael, an increase of VND1.4 million per tael in buying rate and VND1.75 million per tael in selling rate compared to the previous day, at 5 p.m. in Ho Chi Minh City.

At the same time in Hanoi, Bao Tin Minh Chau Jewelry Company listed the price at VND53.4 million per tael for buying and VND54.35 million per tael for selling, up VND1.15 million per tael in buying rate and VND1.5 million per tael in selling rate.

In the global market, bullion price rose by $10 an ounce over the previous trading session to trade at US$1,868 an ounce at 11.30 a.m. Vietnamese time.

From the beginning of this week, the global gold price has risen by nearly $60 an ounce, equivalent to an increase of around VND1.7 million per tael, while the domestic gold price has climbed by more than VND4.3 million per tael. Currently, after conversion the global gold price was at around VND52.4 million per tael, lower than the domestic price by VND2.2 million per tael. According to large banks in the world, stagnant economic situation, complicated developments of the Covid-19 pandemic, and unstable socio-political situation have prompted investors to seek the precious metal to prevent risks. This is the main reason that causes the metal to increase sharply recently. Goldman Sachs Bank forecasted that bullion price would likely hit $1,900 an ounce in the next three to six months and $2,000 an ounce one year later. The Bank of America even said that record stimulating policies of countries amid the Covid-19 pandemic might send gold to $3,000 an ounce by the end of 2021.

Domestic gold experts also said that the indirect factor causing the price of gold to increase rapidly is the information that the number of Covid-19 cases continues to rise sharply and it is still unknown when the vaccine will be found. This has urged investors to seek gold as a safe-haven. The high investment demand for gold is likely to remain if the Covid-19 pandemic is not well-controlled globally. Along with that, the main reason for the continuously increasing gold price is that big investors poured money into gold in the past three years before the Covid-19 pandemic.

According to the World Gold Council, central banks bought gold 3-4 years ago and the highest purchase rate is from the second half of 2019 to now. In 2019 alone, central banks bought about 700 tons of gold, the highest volume in the past six years. As for the gold investment funds in the world, they hold about 3,000 tons of gold and it is also the largest amount of gold held by them. Many major financial institutions, investment funds, investment banks, or other commercial banks also concentrate their capital on gold. The sharp increase in gold price is also because of the economic easing policy that has caused inflation to start appearing in some countries - especially when money is pumped out continuously to save the economy affected by the pandemic in the US and the EU. In the past three months, the US Federal Reserve (FED) has injected about $4-7 trillion into the market to balance the economy, not to mention other cash flows from the UK, Japan, or other countries.

However, according to expert Nguyen Tri Hieu, investors can invest in long-term gold because the domestic gold price will tend to increase, following the global gold price but they should not speculate or surf gold because it is extremely risky. The gap between buying and selling rates has been widened to VND700,000-VND800,000 per tael by gold trading businesses, or even up to nearly VND1 million per tael compared to the normal time that is at only VND200,000-VND300,000 per tael. 

Expert Huynh Trung Khanh recommended that domestic investors should also avoid rushing to buy gold when the gold price rises and hurriedly sell when it adjusts. To successfully invest in gold, investors must follow the global economic situation, in general, and the international gold market in particular amid the developments of the Covid-19 pandemic. With gold prices constantly fluctuating in a wide range, if domestic investors do not closely follow and understand the movements of the world market, they will face many risks.

By Nhung Nguyen – Translated by Thuy Doan

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