Gold prices in Vietnam explode: government takes action!

Gold prices in Vietnam explode: government takes action!

Amid a tense market situation, the Prime Minister of Vietnam has ordered measures to efficiently manage the gold market. The aim of the initiative is to tame the wildness of price fluctuations, which have become increasingly evident in recent months due to geopolitical developments. Huynh Trung Khanh, deputy chairman of the Vietnam Gold Traders Association, explains that the price increases are due to increasing demand, not inflation from sellers. This is influenced by the financial and market conditions, which have been recorded in government communications.

The Prime Minister sent a telegram to the Governor of the State Bank and other ministries emphasizing the need to implement effective solutions to stabilize the gold market. A key concern is controlling price differences between domestic and international gold prices, which at times ranged between 1-2%. This uncertainty has caused gold prices in Vietnam to hit historic highs this week, exceeding global prices by 34%, as VNExpress reported.

Market development and price fluctuations

The situation is coming to a head: on Tuesday, the price of SJC gold rose to VND80.3 million (approximately $3,304) per tael, an increase of almost 20% since the beginning of the year. The association attributes this development to the poor balance between stagnating production and growing buyer interest. Khanh describes that given the sharp rise in prices, buyers tend to purchase gold in a “herd instinct” in the hope of even higher future values. Vietnam.vn shows that proactive information and communication work is essential to stabilize public sentiment regarding the market.

Despite the high demand, the production of high-quality gold bars in Vietnam, which is subject to strict government controls, is not increasing. There has been no significant increase in domestic production since 2014, and SJC's production machinery has been idle for years. In addition, some of the gold for jewelry production has been diverted for export, which further limits supplies. These circumstances could result in an “antique” character of the gold bars, increasing the risks for buyers.

Political reactions and outlook

To resolve the situation, the Prime Minister calls on various ministries to work together to prosecute violations of the law in the gold market and introduce effective market regulation. The state bank's task will also be to monitor gold trading and adjust for possible violations of the law. Observations on gold price developments and appropriate countermeasures should be taken to ensure the stability of the financial and currency markets.

The volatility of gold prices and the ongoing rise make it advisable for buyers to be cautious as price fluctuations can be significant and involve high risks. It is suggested that the numbers be monitored closely and adjustments made if necessary in order to achieve sustainable stability in the gold market.