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Customers remain calm amid gold price hikes

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Global gold price continuously hit record, sending the price of gold in Vietnam to above VND42 million per tael, the highest level in the past six years. On the market, selling trend was taking the upper hand but there was no sudden change.

Customers remain calm amid gold price hikes

On August 8, domestic gold price made a seven-day-winning streak, surpassing VND42 million per tael. Particularly, Saigon Jewelry Company listed gold price at VND41.85 million per tael for buying and VND42.25 million per tael for selling in Ho Chi Minh City, up VND650,000 per tael over the previous day.

At the same time in Hanoi,  Doji Gold and Gems Group bought gold at VND41.75 million per tael and sold at VND42.15 million per tael, an increase of VND600,000 per tael in buying price and VND400,000 per tael in selling price.

Although the price of gold continuously escalated, gold stores in Hanoi and HCMC saw a few customers. An employee of Bao Tin Minh Chau gold store in Hanoi said that the number of customers to his store increased but they mainly visited the store to sell gold. In the past two days, selling trend tended to decline.

Representatives of some gold traders in HCMC also said that gold buying and selling momentum has not seen sudden fluctuations. There was neither situation of heavy buying or heavy selling nor a shortage of gold. Giving comments about this situation, many experts said that this reflects people’s confidence in macro-economic management of the Government. In addition, people have also drawn lessons from previous gold hikes, understanding that this is a normal movement of the market.

In fact, global gold price has passed the forecast by international experts that gold price would hit US$1,500 an ounce by the end of August. Specifically, bullion price in New York on August 7 traded at $1,501.1 an ounce, up $12 over the previous trading session. After converting, this price was equivalent to about VND42 million per tael, around VND150,000-VND250,000 per tael lower than domestic one. However, with rising momentum of global bullion price, since the beginning of August, domestic gold price has risen by more than VND2.5 million per tael, or 6.5 percent. While since the beginning of this year, the precious metal has climbed more than VND5.5 million compared to the price level of VND36.5 million per tael earlier.

When the heavy metal surpassed VND42 million per tael, selling tendency took the upper hand but not too much. As domestic gold price strongly changed, gold traders expanded buying and selling rates by above VND500,000 per tael, or even up to VND800,000 per tael compared to a gap of VND100,000 per tael when there was not ‘wave’ on the market. Therefore, gold trading for surfing becomes less attractive as gold is bought at high prices but sold at low prices.

Forecast by the Goldman Sachs Bank, the US and China will not be able to reach a trade agreement before the US election in 2020 and the US Federal Reserve will have to cut interest rate for two more times this year to limit negative impacts of the trade war. Once Fed loosens its monetary policy, this movement will back gold price.

According to Bloomberg, gold is one of assets benefitting most from fluctuations in global financial market caused by increasing trade dispute between the US and China. The precious metal has been playing well the role of a safe-haven as if the trade war escalates higher, gold price will possibly hit $1,600 an ounce.

Mr. Phan Dung Khanh, an expert, said that the tendency of domestic and global gold price was basically the same but the range was different. If global gold price climbs $10, the price of gold in Vietnam only surges by $1. Increases in domestic gold price are usually lower than those in global price. According to Mr. Khanh, currently, domestic gold price is quite stable in comparison with that 8-9 years ago thanks to effective gold management policy of the country. He said that gold would make correction in short term after advancing for 7-8 consecutive weeks but in long term, domestic gold price would stand firmly above VND40 million per tael. He explained that figures from the World Gold Council showed that 54 central banks of countries around the world want to keep gold and buy more gold in the next five years. Therefore, gold price will hardly drop during this time.

By Nhung Nguyen, Luu Thuy – Translated by Thuy Doan

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