Gold prices drop, the global gap narrows

Domestic SJC gold bars and gold rings have now retreated to around the VND165 million per tael mark, while the premium against the converted world price stands at only about VND16 million per tael, significantly lower than the peak of nearly VND30 million per tael recorded in March.

Gold expert Chu Phuong said world gold prices are under pressure after the US released a non-farm payroll report that beat forecasts and inflation at 3.8 percent, higher than market expectations. This reduces the likelihood that the US Federal Reserve (Fed) will cut interest rates in the near term, at least in the first half of the year.

Investors remain cautious as US-Iran tensions show no signs of easing and US President Donald Trump has not agreed to proposals from Iran.

In addition, the US Dollar Index (DXY) is still holding around the 98-100 point range, so conditions are not yet favorable to support gold prices. Sales of gold by some central banks have also made market sentiment less positive.

“Limited gains in world gold prices leave domestic gold lacking momentum to break out. Meanwhile, the exchange rate remains high and banks’ deposit rates are still attractive, so demand for gold investment has narrowed somewhat,” Phuong said.

On the narrowing of the domestic-world gold price gap to about VND16 million per tael, Phuong said this reflects more cautious investor sentiment compared to the previous period. In her view, this is a positive signal.

“Previously, many investors were swept up in FOMO when gold prices surged and ignored the excessively wide spread. If they bought when the gap was large, investors would have trouble selling unless world gold prices break above $5,000 per ounce,” she emphasized.

The narrowing gap also helps the domestic gold market link more closely with the world, reducing the impact of short-term sentiment.

Nguyen Quang Huy from Nguyen Trai University said the narrowing spread shows the domestic gold market is gradually shifting from expectation-based pricing to reflecting fundamentals and real supply-demand more closely.

In Q1/2026, domestic gold prices rose sharply not only due to the upward trend in world gold, but also because of asset-hedging sentiment, expectations of further price increases, and gold hoarding amid global volatility in geopolitics, interest rates, and exchange rates. When safe-haven sentiment peaks, "chasing the market" easily emerges, pushing domestic prices up significantly faster than international rates.

According to Huy, the narrowing gap reflects three important shifts.

First, speculative and herd hoarding sentiment has cooled. Second, effective policy management and guidance have helped stabilize market expectations. Third, the domestic gold market is reflecting international movements more closely.

Will price gap return to VND10 million per tael?

According to Phuong, the gold price gap may continue to narrow but is unlikely to drop quickly to VND10 million per tael because domestic gold demand remains present.

From a long-term perspective, Huy argued that a gap of around VND 16 million per tael is still relatively high compared to international norms. This indicates that Vietnam's gold market still suffers from structural supply-demand mismatches, limited international integration, and low market competitiveness.

He said the medium-term trend is likely for the spread to continue narrowing, but the process will be gradual and is unlikely to fall sharply in the short term.

First, world gold prices remain elevated due to geopolitical instability, central banks increasing gold reserves, and expectations of US monetary policy adjustments. 

In addition, the legal framework for managing the gold market has been revised to improve transparency, enhance market operations, and limit abnormal price volatility.

Moreover, as other investment channels such as stocks, real estate, business production, or corporate bonds gradually recover, speculative flows into gold will tend to reallocate rather than concentrate too heavily in one safe-haven channel.

“The gap between domestic and world gold prices may remain relatively high in the near term because Vietnam’s gold market has unique characteristics, especially in supply sources, circulation costs, and market structure. Therefore, the trend is gradual narrowing, but it is hard to return to absolute parity with world prices overnight,” Huy said.

Tuan Nguyen