The domestic gold market continues to be hot. SJC bullion gold prices made a new record on December 22, hitting VND77 million per tael, while ring gold was traded at VND62.08-63.03 million per tael (buy and sell).

While the gold market is heating up, bank deposit interest rates are cooling down. The ‘big four’, or the four biggest commercial banks with state capital (Vietcombank, BIDV, VietinBank and Agribank) quoted interest rates of 4.8-5 percent per annum for long-term deposits (12 months or longer). Therefore, investors are reconsidering their portfolios.

Huynh Trung Khanh, deputy chair of the Vietnam Gold Business Association, advisor of the World Gold Council in Vietnam, said: “Sometimes domestic prices go up in accordance with world prices. But at times, domestic prices stay high though world prices fall,” he said, adding that in general, the upward trend is prevailing.

The expert said there has been no additional supply (no more gold produced) over the last 10 years, and only SJC gold is traded in the market. Therefore, there always is a gap of VND13-14 million per tael between domestic and world prices.

“9999 ring gold prices go up and down in accordance with world prices, while SJC bullion gold prices go up and down in accordance with people’s sentiments,” Khanh said. “The margin between sell and buy prices is always set at VND1 million per tael to ensure profits for traders."

“The domestic prices mostly go up and don’t go down. If the state allows production of more gold, prices will decrease and the price gap will no longer exist,” he said.

At the latest meeting discussing monetary policy, the US FED decided not to raise interest rates and announced a plan to cut interest rates three times next year.  

If so, according to Khanh, the US dollar price and US bond interest rates will go down, while gold prices will go up.

If world prices continue to rise, prices in Vietnam will be raised, unless the state allows  imports of material gold to produce SJC gold.

“The State Bank of Vietnam (SBV) just needs to announce it will allow the import of material gold in the future and the prices will drop at once,” Khanh said.

Tuan Nguyen