Gold hits one of the highest marks in recent memory

Buyers and sellers at a gold store in Ha Noi during one of the highest gold surges in recent memory

Saigon Jewelry, Silver and Gemstone Company (SJC) posted a buying price of VND71.3 million (US$2937.18) per tael and a selling price of VND72.3 million at the end of last week, an increase of more than VND300,000 per teal for sellers and VND500,000 for buyers compared to prices posted just 24 hours before.

Meanwhile, other major gold traders including DOJI, Phu Quy Jewelry, and Phu Nhuan Jewelry (PNJ) also posted higher buying and selling prices from VND250,000 to VND300,000 per tael for JSC gold bars.

In just one week, prices for SJC gold bars have surged by more than VND1.6 million per tael.

Similarly, SJC 9999 gold rings posted a buying price of VND60.2 million and a selling price of VND61.6 million, an increase of VNDD200,000 within the last 24 hours. PNJ has set prices for 24k gold rings at VND60.2-61.4 million per tael, an increase of VND550,000 for buyers and VND500,000 for sellers from the day before.

Two major traders, Bao Tin Minh Chau and Bao Tin Manh Hai, have set even higher prices for 9999 gold rings at VND61.02-62.02 million per tael last week, breaking the VND62 million per tael mark, one of the highest prices to date.

In the global market, prices have surged to $2,003 per ounce by the end of last week, an increase of $11 per ounce from the previous trading session. After conversion, prices were at VND59 million per tael for the precious metal (excluding taxes and fees), setting gold prices in the domestic market VND2 million higher for gold rings and a whopping VND13 million for SJC gold bars per tael.

Since breaking the $2,000 threshold, global prices have maintained it for the last two weeks.

According to market analysts at TD Securities, a Canadian investment bank and financial services provider, Chinese buyers purchased around 17.5 tonnes of gold in the past week alone.

Daniel Ghali, a senior commodity strategist at TD Securities, said Chinese buyers will likely continue to add gold to their asset portfolios. This unexpected demand was said to be one of the reasons for the sharp rise in gold prices.

However, he said this move could just be primarily speculative. With the agreement between Israel and Hamas to temporarily cease fire weakening demand for the safe-haven precious metals, prices may decrease below $2,000 per ounce in the near future.

On the contrary, some economists said in the short term, the price of precious metals can still be supported by other factors, including seasonal influence. According to Nicky Shiels, Head of Metal Strategy at MKS PAMP, a provider of financial and physical trading services, in the past five years, gold has consistently increased by an average of 2.7 per cent during the period of Thanksgiving to December 31.

In the long term, gold prices are likely to be dependent on other factors such as the US Federal Reserve's (FED) monetary policies.

Investors will have to wait until FED aggressively cuts the operating interest rate for gold to maintain a robust upward trend above $2,000 per ounce. Recently, FED Chairman Jerome Powell stated that the operating interest rate still needs to be kept high as inflation is not yet under control, said Barbara Lambrecht, a commodity market analyst at German Commerzbank.

As the US turns its focus to monetary policy, the global gold market will likely remain sensitive to GDP and inflation data from the world's largest economy. While the US has shown promising growth during the third quarter this year, there have been concerns over slowing down in the last quarter of 2023.

According to economist Nguyen Tri Hieu, higher gold prices could be linked to a weakening US dollar. On November 14, the US Dollar Index dropped from 106 points to 104 points, leading to an upward trend in world gold prices.

Meanwhile, other issues related to conflicts and global economic volatility continued to persist without signs of easing. This has increased the appeal of gold as a safe haven for investors, causing gold prices to rise.

"In the domestic market, gold prices are also influenced by the global upward trend, although these two markets are less interconnected. An internal factor affecting gold prices is the difficulties arising from the financial market. At the end of the trading session on November 23, the VN-Index stock index dropped to 1,088.49 points, a decrease of 25.33 points (-2.27 per cent); the HNX-Index decreased by 2.58 per cent to 224.54 points; and the Upcom-Index decreased to 84.95 points. The recent decline in the stock market is also a factor causing many investors to shift capital from the stock market to precious metals. This, in turn, has led to an increase in domestic gold prices," Hieu said.

VNS