SJC gold pieces being sold at a gold shop in Hà Nội. VNA/VNS Photo

Investment Advisory Director of Maybank Investment Bank Phan Dũng Khánh said that global gold prices may continue rising in the near future.

"In my opinion, gold prices may continue to break records in the coming months, but the likelihood of a significant gain leading to significant profits for investors, or surpassing US$3,000/ounce this year, is very unlikely," he said.

Possibly the largest factor that plays into gold's favour remains the almost certainty, according to many economists, of the US Federal Reserve lowering interest rates. This will ease pressure on the domestic exchange market, making hoarding foreign currencies less appealing and turning some investors' attention to gold. 

Prices, however, are unlikely to experience another surge, which sent the gold price up as high as 30 per cent up compared to last year. The precious metal remains the most volatile of investments, potentially being affected by market factors, domestic policies and international geopolitical events. 

Whether prices will continue to climb largely depends on large central banks' appetite, such as those of China and India, who last year were major buyers of gold. So far, economic signals have been favourable as investment flows to Asia remain strong due to heightened interests in diversifying and hedging against recession and geopolitical risks.

According to Khánh, gold prices rarely increase by 20-30 per cent a year and it would take some extraordinary conditions to manage the same feat again, especially as the government has started responding with counter-measures to stabilise prices.

He said during a period of ten years, gold prices may hit a streak for a year or two. 

"Last year we saw gold breaking many historic marks. Now we are in the second half of 2024 and for the last few months, the precious metal has lost a lot of its momentum. It's possible that by the time the Fed lowers interest rates gold will have already peaked, making it much more difficult to climb again," Khánh said.

Earlier this year, as an investment, gold returns far exceeded savings deposits and stocks. On May 10, the price of SJC gold bars at one point reached VNĐ92.5 million per tael. 

Investment Director of Vietcombank Fund Management Co., Ltd. Dương Kim Anh said investors can retain some control over investments such as stocks and shares, because public companies are required to provide open operational and financial information. Meanwhile, gold investors are exposed to much uncertainty and risks beyond their control.

She said in the past, there were time periods in which gold prices went down as low as 70-80 per cent compared to the previous level and it had taken about eight years for gold to bounce back.

Commenting on large central banks' gold hoarding, she said in the near future, whether gold prices rise or fall will depend heavily on the actions of central banks. Whether they continue to buy gold or not is difficult to predict, however. 

Strong counter-measures by the Vietnamese government have started showing effects with gold being excluded from investment portfolios of individuals and funds.

Although global gold prices are expected to continue rising, this investment channel in Vietnam is becoming increasingly less attractive, mainly due to recent gold market management policies by the State Bank and reduced exchange rate pressure. The potential for profit from gold for investors is becoming more challenging.

CEO of AFA Capital and co-founder of the Vietnam Financial Advisors Community (AFA) Nguyễn Minh Tuấn said that earlier this year, AFA Capital recommended investors increase their allocation to gold. However, since June 2024, the fund has stopped recommending the precious metal.

"We have concluded the benefits of holding onto gold do not offset the risk of prices plummeting. We have a plan to reduce our holding this September," he said. 

Investors have become even more weary of trading gold recently as buying and selling were closely monitored for violations. Difficulties in securing new sources of finance from the global financial market will likely hamper investors' efforts in betting on gold. 

Tuấn recommended that investors diversify their portfolios to reduce risk. As for AFA, he said the organisation allocated 55 per cent of its funds to stocks, while reducing investment in gold.

A representative from the Foreign Exchange Management Department under the State Bank of Vietnam said investors should exercise extreme caution when trading gold, as global price fluctuations are unpredictable. VNS