Market dynamics driving gold prices

Gold prices in Vietnam have soared to record levels, reaching 100 million VND per tael ($4,000 per ounce), smashing previous records and surprising analysts.

However, experts from the Banking Academy of Vietnam, led by Associate Professor Tran Viet Dung, warn that gold prices could still face a significant correction under certain scenarios.

Speaking at the “Investment Opportunities in a New Context” conference held on March 19, Dung and his macroeconomic research team emphasized that gold remains a highly attractive commodity across all social classes. The precious metal’s price movements are shaped by both domestic and international factors.

Global and domestic influences on gold prices

According to the research group, international gold prices continue to impact the domestic market through imports. The World Gold Council predicts that global prices will likely continue to rise throughout 2025, although at a slower pace than in 2024.

One major factor influencing gold prices is the value of the US dollar. As the global economy recovers slowly, the US Federal Reserve (Fed) is expected to cut interest rates throughout 2025, which could weaken the dollar.

This trend would increase global gold prices. However, a weaker dollar could also reduce the USD/VND exchange rate, lowering import costs and potentially decreasing domestic gold prices.

Vietnam’s monetary policy will also play a crucial role in shaping gold prices. With interest rates expected to rise slightly to attract deposits, the increased appeal of bank savings could draw speculative funds away from the gold market, reducing demand and stabilizing prices.

Moreover, tighter government controls on gold imports and measures to stabilize the domestic market will help curb speculative trading, maintaining more balanced gold prices.

Possible scenarios for gold prices in 2025

Associate Professor Tran Viet Dung and his research team presented three possible scenarios for gold prices in Vietnam in 2025:

Base Scenario:
Gold prices range from 81 to 87 million VND per tael ($3,300 to $3,540).
This scenario assumes steady global economic recovery and moderate changes in monetary policy.

Bullish Scenario:
Prices soar to 88-92 million VND per tael ($3,580 to $3,740), driven by sustained inflation and geopolitical instability.
Peaks may occur during high-demand periods, such as major holidays and economic uncertainties.

Bearish Scenario:
Prices drop to 72-80 million VND per tael ($2,930 to $3,260) if the global economy recovers rapidly, central banks tighten monetary policies, and the USD strengthens significantly.
Higher domestic interest rates could attract savings, pulling speculative investment away from gold.

Stock and real estate markets may become more attractive, drawing investment away from the gold market.

Risks and long-term outlook

While the short-term outlook includes potential declines, long-term predictions remain optimistic. Dung suggests that gold prices will continue to be supported by loose monetary policies and rising geopolitical risks globally.

Moreover, the increasing gold reserves of major central banks worldwide are expected to sustain price levels in the coming years.

For investors, understanding the complex interplay of international monetary policies, domestic interest rates, and geopolitical factors is crucial to making informed decisions.

With the gold market remaining highly volatile, experts urge caution when considering large investments during this uncertain period.

Tam An