Gold prices fluctuate with many unprecedented highs, State Bank steps in
(Baonghean.vn) - In the last days of 2023, the domestic gold market recorded strange movements, with many unprecedented price peaks.
Gold priceheat up
The domestic SJC gold bar price at the end of 2023 recorded strong increases and continuously set new "peaks", with many unprecedented "bests": Reaching the highest historical gold price mark in the Vietnamese market; The highest difference between domestic and international prices; The highest difference between selling and buying prices; The difference between SJC gold price and Rong Thang Long and the amplitude of price increase and decrease in a day are also the largest ever.
Specifically, the highest price in the history of gold prices was recorded at noon on December 26, 2023, with the selling price of SJC gold reaching over VND 80.3 million/tael, an increase of 11.91% compared to the level of VND 67.4 million/tael on January 15, 2023. On the same day, December 26, 2023, the international gold price was trading around USD 2,063/ounce, an increase of USD 232/ounce (equivalent to an increase of 12.7%) compared to the beginning of this year. The world gold price converted to VND (including tax and processing fees) is at VND 61.41 million/tael. Thus, the difference between domestic and world SJC gold prices is about VND 19 million/tael.
On December 29, 2023, Phu Quy Group had a buying price of 71.5 million VND/tael and a selling price of 76.5 million VND/tael. The difference between the buying and selling prices was 5 million VND/tael. Bao Tin Minh Chau's Rong Thang Long gold brand stood at 62.32 - 63.52 million VND/tael (buying - selling). The difference between the selling prices of SJC gold and Rong Thang Long was 13 million VND/tael.
The domestic gold price has cooled down overnight to 6 million VND/tael, after the Official Dispatch 1426/CD-TTg dated December 27, 2023 on solutions to manage the gold market and the information dated December 28 of the State Bank announcing that in January 2024, this agency will submit a summary report of Decree 24/2012/ND-CP, including proposals to amend and supplement a number of regulations on gold market management to suit the new context of the market.
What is the cause?
The main driving force for the recent surge in gold prices is associated with many factors both external and internal:
One side, factors that increase the world gold price are associated with the moves and expectations that the US Federal Reserve (Fed) will cut interest rates, as well as with the expectation that the USD will depreciate and the USD index has decreased; At the same time, associated with the escalating geopolitical tensions of the prolonged Russia-Ukraine conflict, combined with concerns about the possibility of Iran closing the Strait of Gibraltar and the complicated geopolitical situation in the Middle East surrounding the conflict between Israel and Hamas. In that context, some banks and investment funds are turning to a more cautious trend and will invest in gold. As of the third quarter of 2023, central banks of countries have bought about 800 tons and may exceed 1,000 tons this year.
On the other hand, the factors that increase the domestic gold price are not only due to the increase in the world gold price, but also due to the interest rate of savings in VND falling to the lowest level in many years; the stock market and real estate market are sluggish; the macro economy is in a difficult situation, so investors are limited in investment channels and opportunities for high profits. Moreover, the supply of SJC gold does not fluctuate much because the State Bank does not produce more; while people's trust and expectations in the SJC brand are high, creating pressure to increase the purchase price of SJC...
In particular, the State's monopoly on SJC gold bars and failure to increase the supply of SJC gold has turned SJC gold into a domestic currency. In other words, the price of SJC gold in Vietnam is a specific currency price, not the price of raw gold, and depends entirely on domestic supply and demand, not just on fluctuations in world gold prices. The monopoly and lack of transparency of SJC gold also creates a huge price gap between SJC gold bars and many other gold bar brands, even though the quality and weight are similar.
In addition, during the year-end festival season, the demand for buying gold is greater than selling, which also contributes to pushing up the price of SJC gold.
Gold prices depend on the trend of central bank interest rates; on the recovery of the economy in general and the corporate bond and debt channel, on the geopolitical situation, inflation and the financial system in particular...
NeedThere are solutions to stabilize the gold market.
In that context, the Prime Minister's Official Dispatch No. 1426 dated December 28, 2023 sent to the Governor of the State Bank and ministries and branches directing solutions to manage the gold market was timely and created a certain miracle when it had the effect of cooling down the market, restraining the erratic increase of domestic gold, which negatively impacted the safety of the financial and monetary markets and social psychology.
With that spirit, the State Bank needs to promptly implement solutions to stabilize the gold market; proactively develop scenarios and plans to respond to fluctuations in world and domestic gold prices to be ready with handling measures and use tools within its authority. Absolutely do not let the economy become gold-ized, do not let it negatively impact exchange rates, interest rates, the money market, foreign exchange and national financial and monetary security and safety.
In particular, it is necessary to soon have effective solutions to manage and operate domestic gold bar prices according to market principles, not allowing the gap between domestic and international gold bar prices to remain as high as in the past.
At the same time, the State Bank promptly detects and strictly handles violations according to the law, especially acts of smuggling, profiteering, speculation, manipulation, and taking advantage of price-pushing policies by organizations and individuals, causing instability and insecurity in the gold market; summarizes the implementation of Decree 24/2012 on the management of gold trading activities to promptly propose to competent authorities to consider amending and supplementing regulations. Thereby ensuring a transparent, healthy, effective and sustainable gold market.
Domestic gold prices fluctuate constantly, often rising quickly but also falling very quickly, heavily influenced by psychological factors, so they are not for non-professional, inexperienced investors without reserves.
