Does gold “shine” amid increased uncertainty?

According to Mr. Nguyen The Hung, Deputy General Director of Vietnam Gold Company, after the war between Russia – Ukraine happened, the world gold price had a time to try to return to the all-time high of 2,070 USD/oz. and the domestic SJC gold price has also surpassed the peak, reaching 74 million dong a tael, then the domestic gold price has cooled down, but up to this point is still trading and stable around the 70 million dong threshold. Chances are, the gold price may still maintain and continue to increase from now until the end of the year.

Those who buy gold for long-term storage, from 10 to 20 years, should go in the direction of ring gold, because when they are ready to store long-term, they should choose gold whose price is close to the world price.

Of the points we’ve seen year-to-date, gold is “shining” as a hedge as it’s up about 10%, SJC gold is up about 12%. And international stock indexes such as S&P 500 fell about 8%, Dow Jones fell 6%, Nasdaq fell 15%, even the VN-Index fell seriously.

At this moment, the gold price is benefiting from a few factors such as: Firstly, the ongoing geopolitical instability, especially the war between Russia and Ukraine, causing an energy crisis, pushing up oil prices, in addition to the high oil prices. also put upward pressure on commodity prices. Second, from the above problem leads to the story of inflation taking place on a large scale, in many parts of the world. Just like the US just recently, the inflation figure announced a record of 8.5%, the highest level since 1972. In which, there are all three reasons including currency, demand-pull and cost-push .

In the trading session on April 21, the world gold price remained at 1,957 USD/ounce, equivalent to 54.7 million VND/tael. The domestic gold price is 70.25 million dong/tael on the selling side. The difference between domestic and international gold is 15.55 million VND/tael.

“So the price of gold is in an uptrend and is likely to increase sharply by the end of the year if gold can surpass the $2,000 mark. I think this could happen between now and the end of the year for sure, maybe even earlier in this 2nd and 3rd quarter. With the development of the world gold like that, the domestic gold price will also increase and stabilize towards the mark of about 74 million dong a tael,” Mr. Hung forecast.

According to Mr. Nguyen Minh Tuan, CEO of AFA Capital, the price of gold in Vietnam once reached a record high of 74 million dong a tael and there was a decrease at that time mainly due to the lack of supply. Because SJC gold suppliers in Vietnam with limited supply have pushed up gold prices to limit purchases, and at the same time, the difference in buying and selling prices is also very high, about more than 2 million VND/tael. However, in recent times, the uptrend is quite sustainable.

The CEO also pointed out 5 factors affecting gold’s profit according to the calculation model of the World Gold Council as follows: First, is the development of the economy. If the economy develops, people will tend to buy more jewelry, buy more gold products, which means that if the economy develops, the material demand will also increase.

Second, there are risk factors and unknown factors. This we have experienced when the investment environment has many uncertainties and the geopolitical environment are also factors that are included in the calculation model.

Third, is the opportunity cost. If we consider gold as a foreign currency, then when interest rates rise, normally the value of the US dollar will increase and, in theory, gold will depreciate.

Fourth, is the opportunity cost from an interest rate perspective. When interest rates rise, people will tend to invest in financial products with good returns, for example investing in bonds while gold has no interest.

Fifth, is the trend of the market, such as ETFs, or transactions on the COMEX floor, which are also assessed by the Gold Council.

From his point of view, Mr. Nguyen The Hung said that gold has a very special element, almost predicting upcoming events, certain macro uncertainties that make gold prices go against it. While uncertainty is taking over too much, in addition to geopolitical uncertainty and inflation, the uncertainty we have not mentioned here is the upcoming investment environment. This environment is unstable because it is related to macro issues. “Reviewing historical developments in previous periods, I think that the interest rate of the US Federal Reserve (FED) will increase by at least 4-6% to control inflation. And when the Fed raises interest rates so high, it will lead to an economic recession, this is a danger that people are not taking into account.”

Regarding the difference between Vietnam’s gold and the world’s gold, P. General Director of Vietnam Gold Company said that there is not much difference in the price of ring gold compared to the world gold price. But the price of gold bars, especially SJC, is a special commodity that is monopolized and produced by the State, so the supply is limited, people’s demand for hoarding is still there this year, the difference between the price Gold in the country and the world can not be pulled close.

“For those who buy gold for long-term storage, from 10 to 20 years, they should go in the direction of ring gold, because when they are ready to hoard long-term, they should choose gold whose price is close to the world price to avoid the situation. In the next 5-10 years, the state policy changes, the SJC gold price pulls close to the world gold price, then investors will suffer losses. As for short-term investment, 1-2 years, investors can choose between two types and gold bars are still guaranteed”, Mr. Hung recommended.

According to DDDN