The reason for the sharp increase in domestic gold prices in the first quarter of 2024 is due to the influence from global factors as well as other investment channels with less profitable performance.
At the press conference announcing the economic and social situation in March and the first three months of 2024 by the General Statistics Office, Ms. Nguyen Thu Oanh, Head of the Price Statistics Department, stated that the average domestic gold price in the first quarter of this year increased by 18.23% compared to the same period last year.
A representative from the Price Statistics Department noted that domestic gold prices fluctuate according to world gold prices. Additionally, amidst low savings interest rates, unstable real estate markets, and lingering doubts about corporate bonds, many people are shifting their investments to gold.
According to the Head of the Price Statistics Department, the continuous rise in gold prices has had significant repercussions on the economy.
“Investors are diverting funds into gold to diversify their portfolios and seek profits, causing a scarcity of capital inflow into investment and production. The large amount of money not being directed into production and business is making economic recovery policies more challenging,” Ms. Oanh remarked.
Since the beginning of the year until now, domestic gold prices have continuously reached new highs and remain elevated compared to world gold prices. The price of SJC gold bars has consistently hovered around the range of 80 to 81 million VND/tael and surged to 82.5 million VND/tael in mid-March. Meanwhile, the price of gold rings has also reached record levels, exceeding 71 million VND/tael.
The upward trend in gold prices has prompted many investors to turn to gold, resulting in a situation where supply surpasses demand. At various times, SJC gold rings and gold bars have been “out of stock,” forcing buyers to wait for weeks to make purchases.
Currently, the State Bank (SBV) is still deliberating on the implementation of Decree 24 to devise the most suitable solutions to stabilize the gold market. In accordance with the Prime Minister’s directive, the State Bank will need to propose amendments to Decree 24 and offer measures to stabilize gold prices in the first quarter of 2024.
Regarding the exchange rate, Ms. Oanh remarked that the USD/VND exchange rate will continue to fluctuate as the market anticipates the US Federal Reserve (FED) to postpone interest rate cuts, leading to a rise in the USD, which will remain at high levels. Additionally, the negative interest rate differential between VND and USD persists, with VND interest rates still lower than USD interest rates, and the substantial demand for foreign currency to support production needs continues to exert pressure on the exchange rate. Nevertheless, in the long term, exchange rate pressure is expected to gradually diminish in the near future.
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